The Trial of Vinafood II’s Former Executives: A Case of Devastating Losses Exceeding VND 113 Billion

On May 12th, the Ho Chi Minh City People’s Court opened a first-instance trial to prosecute six defendants, former leaders of the Southern Food Corporation (Vinafood II), for illegally transferring the “golden land” plot at 132 Ben Van Don, District 4, causing a loss of over VND 113 billion to the state.

The defendants include Truong Thanh Phong (former General Director and former Member of the Board of Directors), Tran Van Ven (former Chairman of the Board), Tran Bay (former Head of Planning and Strategy Department), Vu Ba Vinh (former Member of the Board and Head of the Inspection Board), Truong Van Hua, and Truong Van Anh (both former Members of the Board). They are charged with “Violation of regulations on the management and use of state assets, causing loss and waste.”

The two-day trial, held on May 12th and 13th, was presided over by Judge Huynh Van Truc, Vice-President of the Ho Chi Chi Minh City People’s Court. The public prosecutors from the Ho Chi Minh City People’s Procuracy, assigned by the Supreme People’s Procuracy, included Le Huu Ngoc, Ha Duc Nghiep, Pham Van Hien, and Ho Thi Ngoc Anh.

According to the indictment, Vinafood II is a state-owned enterprise that was entrusted with managing and utilizing the land plot at 132 Ben Van Don. In 2010, following the government’s directive to rearrange public housing and land in Ho Chi Minh City, Vinafood II received approval from the municipal People’s Committee and the Ministry of Finance to change the land use purpose to construct a high-rise apartment complex, a commercial and service center, and an office building.

However, before obtaining the land use right certificate, the defendants in the Board of Directors of Vinafood II unanimously agreed to contribute capital in the form of land use rights to the Vinh Hoi Construction and Investment Joint Stock Company for the implementation of the project.

Specifically, Vinafood II went through the procedures to be assigned the land with payment for land use, and then transferred the land use rights to Vinh Hoi Company for the exact amount that the latter had to pay. In return, Vinafood II only held 10% of the charter capital in Vinh Hoi Company, equivalent to 1.5 million shares.

Despite receiving the land use right certificate in 2010, Vinafood II did not account for the increase in assets or establish fixed asset records. Subsequently, the Board of Directors continued to finalize the procedures for transferring the land use rights to Vinh Hoi Company at a self-negotiated price, without undergoing a valuation, violating financial management regulations and rules regarding state capital investment in other enterprises.

In line with the policy of divesting capital from non-core businesses, Vinafood II later sold all 1.5 million shares in Vinh Hoi Company, earning VND 45 billion.

According to the audit conclusion, the defendants’ act of contributing capital in the form of land use rights caused a loss of more than VND 113 billion to the state. After deducting the amount recovered from the divestment, the actual loss amounted to over VND 67.8 billion.

The investigation agency determined that Truong Thanh Phong played the role of the mastermind and leader in this case, while the other defendants were accomplices. Nonetheless, none of the defendants personally benefited from their criminal acts.

The Ministry of Public Security’s Investigation Agency has seized five real estate properties under Tran Van Ven’s name, two properties under Truong Thanh Phong’s name, and four properties under Tran Bay’s name. Additionally, they have frozen VND 7.1 billion in Truong Thanh Phong’s bank account.

From 2009 to 2015, Nguyen Kim Company acquired 99.32% of the charter capital of Vinh Hoi Company and subsequently transferred it entirely to Phu My Hung Investment Company. Presently, the Millennium Project at 132 Ben Van Don has been completed, and all products have been sold to customers. However, due to legal entanglements arising from this case, the purchasers have not yet received their ownership certificates.

To facilitate the investigation, the Ministry of Public Security requested the Ho Chi Minh City People’s Committee to temporarily halt the processing of procedures related to the transfer, mortgage, and changes in business registration of Phu My Hung Company.

Nevertheless, the investigation results confirmed that Phu My Hung Company was an innocent third party, having legitimately implemented the project according to the approved plan and sold all products to the public. The investigation agency has forwarded all relevant documents and proposed that the Ho Chi Minh City People’s Court consider safeguarding the lawful rights of the citizens during the trial.