Four plots of land affected by planning restrictions, preventing project development
The Ministry of Finance’s Inspectorate has just issued financial inspection conclusions at the Hanoi Construction Corporation – Joint Stock Company (HAN).
According to the audited financial statements for 2023, Hancorp had total assets and capital of over VND 6,770 billion, including owner’s equity at the parent company of about VND 1,410 billion.
As of the end of the 2023 financial year, the Ministry of Construction held 98.83% of the ownership capital in the parent company Hancorp, equivalent to approximately VND 1,393 billion.
According to the conclusions of the Ministry of Finance Inspectorate, as of the end of 2023, the Hancorp parent company invested capital contributions in 37 enterprises, with a total amount of more than VND 992 billion.
Of this, Hancorp invested in 7 subsidiaries about VND 192 billion; 13 joint ventures and associates more than VND 344 billion, and long-term investments in 17 other companies about VND 455 billion.
In terms of investment efficiency in these companies, the Ministry of Finance Inspectorate said that 23 companies made a profit in the 2023 financial year. Of these 23 companies, 5 had cumulative losses, but some units had their losses bracketed as “project companies operating at a planned loss.”
Specifically, the project companies operating at a planned loss were Tay Ho International Joint Venture Company (with a capital contribution of 25%) losing more than VND 140 billion, making a profit of VND 40.5 billion in 2023 alone.
Phu My Investment and Construction Joint Stock Company (with a capital contribution of 11.27%) lost more than VND 187 billion, making a profit of more than VND 145 billion in 2023.
Deo Ca Investment and Construction Joint Stock Company (with a capital contribution of 8.06%) lost more than VND 270 billion, making a profit of VND 87.8 billion in 2023.
In addition, 4 companies in which Hancorp invested capital have ceased operations, and 8 companies are operating at a loss, leading to the need to make provisions.
 Hancorp’s Ngoai Giao Doan Project in Hanoi. Photo: Hong Khanh |
The Ministry of Finance Inspectorate pointed out that some of Hancorp’s investments before the equitization date, up to the end of the 2023 financial year, have been inefficient.
Typical examples include investments in Hanoi Construction Corporation No. 2 Joint Stock Company, Mechanics and Construction Joint Stock Company, Thuy Dien Hung Loi Joint Stock Company, Sahabak Joint Stock Company, Bac Ha Noi Urban Development Joint Stock Company, and BOT No. 1 Ground Electric Car Joint Stock Company.
The value of real estate investments as of the end of 2023 was more than VND 426 billion, of which the parent company invested about VND 350 billion, Hancorp Urban Services Joint Stock Company invested about VND 9 billion, and Hanoi Construction No. 1 Joint Stock Company invested about VND 66 billion.
In addition, Hancorp owns four plots of land in the Bai No resettlement area, Co Loa commune, Dong Anh district, Hanoi. The plots were purchased by the Corporation from four individuals, with an area of over 250m2, but only have a decision on the principle of land use, and the two parties signed a transfer contract, but no decision on land allocation or construction permit has been issued.
In the audited capital settlement report, the State Audit Office recorded: In the period from January 1, 2012, to August 15, 2014, due to the area of these land plots being planned for the preservation of the Co Loa relic site in Hanoi, project development could not be implemented, and the unit is looking for partners to transfer the four plots of land to recover the investment capital.
“As of the inspection in November 2024, the parent company has not yet found partners to transfer the four plots of land according to the recommendations of the State Audit Office and the Equitization Steering Committee,” the inspection conclusion stated.
According to the Inspectorate, 4/4 of the inspected units under Hancorp had overdue receivables of up to more than VND 475 billion, leading to the Corporation having to make provisions of more than VND 151 billion, affecting the efficiency of capital management and use of the enterprise.
Recommending capital divestment and investment adjustment to prevent losses
The Ministry of Finance Inspectorate evaluated that the inspected units still had some accounts receivable and payable that had not been fully reconciled. There were also some difficult-to-recover accounts receivable, overdue payables, and provisions.
In addition, there was the tracking of suspended work-in-progress costs for projects that had long ceased operations, which posed a risk of capital loss. Many completed and handed-over projects had contract-based lump-sum costs that exceeded the contract ratio.
Furthermore, some units had financial investments in loss-making businesses, posing a risk of capital loss. Capital divestment was also not carried out according to the approved roadmap by the state management agency.
The Inspectorate clearly stated that the responsibility for the violations lies with the leaders of the Hancorp Corporation and the leaders of its member units.
Therefore, the Ministry of Finance Inspectorate requested Hancorp to divest its capital from the four land plots that were invested in but could not be developed into projects due to planning restrictions, as they fall within the preserved area of the Co Loa Relic Site in Dong Anh district, Hanoi.
At the same time, Hancorp was requested to organize a review and evaluation of financial investments in inefficient businesses. The representatives of the parent company’s capital were instructed to develop specific plans to overcome the financial difficulties of the businesses.
The Inspectorate also proposed capital divestment, investment structure adjustment, and capital recovery for inefficient investments with cumulative losses, ensuring the principle of capital preservation and development to prevent state capital and asset losses.
Along with this, the Inspectorate requested Hancorp to direct the full reconciliation of accounts receivable and payable, assess and analyze the ability to pay and recover debts, and not let the overdue accounts receivable of more than VND 475 billion as of December 31, 2023, increase further.
Hong Khanh
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