The Government Inspectorate has recently concluded its investigation into the compliance with policies and laws regarding the issuance of private corporate bonds and the use of funds raised from these bonds (from January 1, 2015, to June 30, 2023).
The inspection findings reveal that 67 bond-issuing entities were scrutinized, including 5 joint-stock commercial banks, 37 joint-stock companies, and 25 limited liability companies. Notably, 18 of these entities are affiliated with the Novaland Group, and 6 are linked to Masan Group.
From January 1, 2015, to June 30, 2023, these 67 entities issued a total of 827 corporate bond codes, amounting to over VND 462.824 trillion. Of this, VND 270.635 trillion, or 58.4% of the total issuance value, was in unsecured corporate bonds.
The 18 entities under the Novaland Group and its subsidiaries successfully issued 131 corporate bond codes with terms ranging from 1 to 5 years, totaling VND 67.100 trillion.
As of June 30, 2023, 59 bond codes remained outstanding among these 18 entities, with a total value of VND 34.835 trillion. Two entities had overdue principal and interest payments, while four had overdue interest payments, totaling VND 5.528 trillion in overdue principal and interest.
The inspection report highlights that Novaland Group issued and utilized VND 1.500 trillion from corporate bonds to increase capital in its subsidiary, Khai Hung Real Estate LLC. This subsidiary then acquired a 99.9% stake (approximately VND 1.843 trillion) in The Century Golden Real Estate LLC, owned by Mrs. Vo Thi Kim Khoa.
However, a review of cash flows at several banks indicated that Mrs. Khoa’s capital contribution to The Century Golden Real Estate LLC was not substantiated, as most of it was transferred on the same day.
After Novaland Group transferred VND 1.500 trillion from the bond proceeds to Khai Hung Real Estate LLC, the funds were circulated through multiple intermediary companies, ultimately benefiting Nova’s real estate trading companies.
The inspection report concludes that Novaland Group and three other subsidiaries—Unity, Aqua, and Lucky House—violated regulations in issuing corporate bonds. After receiving bond proceeds, individuals transferred approximately VND 7.084 trillion to Nova Real Estate Trading JSC for use.
From January 1, 2015, to June 30, 2023, 20 entities associated with Novaland Group issued 45 private corporate bond codes, totaling VND 27.350 trillion. As of June 30, 2023, 23 codes remained outstanding, valued at VND 16.898 trillion. Four entities had overdue principal and interest, while two had overdue interest, totaling VND 4.555 trillion in debt.
The inspection identified four Novaland-affiliated companies in violation: GreenWich, BNP Global, Cat Lien Hoa Real Estate Development, and Residence Investment and Development.
GreenWich issued bonds and used VND 2.000 trillion to partner with An Khang Company. By June 2023, over VND 1.571 trillion in principal and VND 241 trillion in interest were overdue, with GreenWich failing to repay bondholders. The company faced potential risks of defaulting on principal and interest, posing significant threats to bondholders.
BNP Global issued bonds worth VND 2.100 trillion to partially pay for a business cooperation contract for the Mui Yen project. By June 2023, over VND 2.000 trillion in principal and VND 64 trillion in interest were overdue. Despite negotiations, bondholders rejected debt extensions. By April 12, 2024, BNP Global repaid all overdue interest and VND 833 trillion in principal, leaving VND 1.216 trillion in outstanding principal.
The Government Inspectorate emphasized BNP Global’s failure to fulfill its obligation to repay bondholders on time. The company currently lacks the means to rectify this situation.
Cat Lien Hoa Real Estate Development issued VND 986 trillion in corporate bonds but delayed interest and principal payments. Residence issued VND 3.000 trillion in bonds to pay deposits for Nova World Phan Thiet resort villas to Nova Real Estate Trading JSC.
Transfer of Novaland Group’s Case to the Ministry of Public Security
Given the limited scope of the inspection and the complexity of the violations, which pose significant risks to bondholders and society, the Government Inspectorate has not yet conducted a detailed examination of Nova Real Estate Trading JSC, as it falls outside the inspection’s purview.
However, due to severe indications of misuse of bond proceeds, the Government Inspectorate has transferred all relevant information about Novaland Group and its four subsidiaries (Khai Hung Real Estate LLC, Lucky House JSC, Aqua City LLC, and Unity Real Estate Investment LLC), along with evidence of potential misappropriation of funds, to the Ministry of Public Security for further investigation and action within their jurisdiction.
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