The Rare Earth Company Chairman Blames the Ministry of Industry and Trade’s Circular

Agreement on the reduction of the quantity of minerals bought and sold

On May 13, the Hanoi People’s Court allotted time for representatives of the prosecution and lawyers to question 27 defendants in a case of illegal exploitation, smuggling of rare earths, and environmental pollution at Thai Duong Group Joint Stock Company.

According to the indictment of the Supreme People’s Procuracy, due to licensing errors by officers of the General Department of Geology and Minerals and the Ministry of Natural Resources and Environment, Thai Duong Group Joint Stock Company was provided the opportunity to illegally exploit and sell over VND 736 billion worth of rare earths and iron ore.

As alleged, the minerals were then sold by Doan Van Huan to two enterprises, including the Vietnam Rare Earth Company of defendant Luu Anh Tuan.

In these transactions, the two parties agreed to issue VAT invoices at a lower price than the actual unit price and to issue invoices for only a part of the minerals, keeping the assets off the accounting books.

Specifically, from 2019 to 2023, Vietnam Rare Earth Company purchased over 3,500 tons of rare earth ore from Thai Duong Group Joint Stock Company, totaling VND 142 billion, with a unit price of VND 40,622/kg.

However, the prosecuting agency determined that the invoices reflected only 765 tons (1/5 of the actual amount), with a value of VND 10.7 billion stated on the invoices, and a unit price of VND 14,000/kg (1/3 of the actual price).

As a result of this transaction, the company’s profits increased significantly, while the raw materials purchased from Thai Duong had no invoices. Therefore, Mr. Luu Anh Tuan instructed his employees to purchase “fake” invoices.

Additionally, as alleged, after purchasing over 3,500 tons of rare earth ore from Thai Duong Group Joint Stock Company, with a Total Rare Earth Oxides (TREO) content of only 18-20%, Mr. Tuan instructed his staff to add Carbonate Salt imported from China to increase the TREO content to 95% and export 474 tons to foreign companies, with a total value of VND 379 billion.

During the export process, Mr. Tuan and his employees exported the products without meeting the required conditions, and falsely declared the product code, violating the law to be exempt from taxes instead of paying the 10% tax as stipulated.

These violations led to Mr. Luu Anh Tuan being charged with “Violation of accounting regulations causing serious consequences” and “Smuggling”. Meanwhile, Mr. Doan Van Huan, Chairman of Thai Duong Group Joint Stock Company, was charged with three crimes.

Afraid of losing mitigating circumstances?

In response to the questioning, defendant Luu Anh Tuan stated that he had studied chemistry and had a thorough understanding of rare earths as a raw material for export and refinement for the electronics, aviation, and electric vehicle industries, mainly exported to Japan.

According to Mr. Tuan, in Vietnam, since 1976, rare earths have never been exported to Japan. Up to now, his company is the only unit engaged in the exploitation and export of rare earths.

Regarding the indictment’s allegation of “buying a large amount of minerals but declaring a small amount”, Mr. Tuan argued that he had to do so following the suggestion of defendant Doan Van Huan.

As for the charge of “Smuggling”, Mr. Tuan explained that exporting goods abroad is very simple, thanks to the electronic customs method, which can be done anywhere in the world. These electronic declarations are evidence that he did not do anything wrong.

According to Tuan, the General Department of Customs also sent a document to the investigating agency stating that he did not violate any regulations and correctly declared the product codes, product descriptions, and exported the correct type of goods. The document also stated that “in the case of exporting 100% domestic raw materials, tax exemption is still applicable in some cases.”

Moreover, the defendant argued that this type of goods is encouraged for export, and the Customs Law also states that it is tax-exempt for export…

“So, is the prosecution wrong in their indictment?”, the presiding judge asked. Mr. Tuan replied that the Ministry of Industry and Trade’s circular was unclear in classifying and coding the goods for export tax purposes. Expressing his frustration, Mr. Tuan said that if he did not plead guilty, he would lose the mitigating circumstance of sincere confession, so it was best to plead guilty.

Following Mr. Tuan’s response, the presiding judge stated that “if the defendant believes that he has not violated any laws and is not guilty, he must express his opinion instead of pleading guilty just to receive a reduced sentence.”