The Multibillion-dollar Empire of Mr. ‘Phao’
On the evening of February 26, according to information from the Ministry of Public Security, the Investigative Police Agency initiated criminal proceedings, arrested and temporarily detained Mr. Nguyen Van Hau (also known as ‘Phao’, Chairman of the Board of Directors of Phuc Son Corporation), for serious accounting violations.
Nguyen Van Hau. Photo: Ministry of Public Security
This is the result of the Ministry of Public Security’s investigation into serious accounting violations that occurred at Phuc Son Corporation, Thang Long Trading and Real Estate Investment Joint Stock Company, and related entities.
Mr. Nguyen Van Hau (also known as ‘Phao’) was born in 1981, living in Bo De ward (Long Bien, Hanoi). Hau “Phao”‘s hometown is in Vinh Tuong district, Vinh Phuc province.
According to the magazine ‘Environmental Economy’, Nguyen Van Hau did not grow up in a wealthy family like other businessmen but had to rely solely on his own efforts.
According to the people of Vinh Tuong district (Vinh Phuc), Nguyen Van Hau had a difficult childhood and had to herd ducks to help his family. Before entering the business world, the owner of Phuc Son Group even had a period where he worked as a horse carriage driver. With determination to escape poverty and “escape from the village’s bamboo trap”, he rose from nothing.
In 2004, Hau established Phuc Son Group Joint Stock Company in Tam Phuc commune, Vinh Tuong district, Vinh Phuc province. Its predecessor was Phuc Son Trading and Construction Co., Ltd., mainly engaged in real estate and construction business.
Gradually, the name Hau “Phao” or Hau “No” became associated with this young entrepreneur from Vinh Phuc.
Chairman of the Board of Directors of Phuc Son Corporation, Nguyen Van Hau before being arrested.
According to VTC News, despite being a “latecomer” in the real estate market, Phuc Son Group is famous for owning a series of prominent real estate projects in Vinh Phuc province. Notable projects include the Phuc Son Commercial and Residential Center (Vinh Tuong district, Vinh Phuc) with a scale of 130 hectares; 15-storey low-income housing in Vinh Yen; Phu Dong urban area (Viet Tri, Phu Tho province) with a scale of 149 hectares…
In early August 2022, Phuc Son Group was approved by the People’s Committee of Quang Ngai province to invest in the Bau Giang urban area.
The project has a total area of 495,932 m2, including 294 commercial houses located on the main road with an area of 46,089 m2, 274 social houses with an area of 19,292 m2, and 795 land plots… The total amount of money that Mr. Hau’s company has to invest in this project is up to 3,318 billion VND.
Although it was recently approved, Nguyen Van Hau had been preparing for this project for a long time. In 2018, this young tycoon founded Bau Giang Urban Area Joint Venture Company in Quang Ngai. The initial charter capital of the company was only 20 billion VND.
In 2019, Nguyen Van Hau became the Chairman cum CEO of the company, at the same time increasing the owner’s equity to 250 billion VND. In both 2019 and 2020, Bau Giang Company did not generate any revenue, reporting losses of 494 million VND and 1 billion VND, respectively.
In addition, also in 2022, Phuc Son proposed to the People’s Committee of Nghe An province regarding the Hung Hoa 1 and Hung Hoa 2 urban area projects in Hung Hoa commune, Vinh city, with a total area of over 200 hectares.
Famous for Infamous Deeds
Despite owning and implementing many multibillion-dollar projects, the business results of Phuc Son Group have declined over the years.
In 2016, revenue was recorded at 514.6 billion VND and net profit at 3.7 billion VND. In 2017, revenue fell to 468.3 billion VND, but net profit soared tenfold to 37.58 billion VND. In 2019, revenue was only 65% compared to 2018, reaching 84.7 billion VND, and net profit plummeted to just 80 million VND compared to 214 million VND in the previous year.
Especially, the business results of Phuc Son in 2020 were extremely poor when revenue continued to decline to 61 billion VND, and for the first time, net profit recorded a loss of 17 billion VND.
Although it is a reputable company, Phuc Son of Hau “Phao” is also involved in scandals, leaving behind many negative impressions.
In the projects invested by Phuc Son Group, there are 3 build-transfer (BT) projects at Nha Trang airport. These projects had been delayed for many years and could not be put into operation as promised by the company at the end of 2017.
According to the records, Phuc Son Group is the investor assigned by Khanh Hoa province to implement projects such as Nha Trang Airport’s road routes and connection nodes; Vong Dai Road connecting Ngoc Hoi intersection and Ngoc Hoi Traffic Node according to the build-transfer contract form.
The capital source for payment of BT projects is the land funds belonging to the Nha Trang Urban Center, Commercial, Service, Finance, and Tourism Zone.
As of August 2022, the total progress of Phuc Son Group’s 3 BT projects reached about 38%, and the total investment cost was 1,284 billion VND. The delayed progress of Phuc Son Group’s BT projects has caused a lot of dissatisfaction among the public.
Also, in relation to activities in Khanh Hoa, Phuc Son Group has been asked by this locality to settle the amount of nearly 12,000 billion VND at the Nha Trang Urban Center, Commercial, Service, Finance, and Tourism Zone project.
Specifically, in August 2022, the People’s Committee of Khanh Hoa province sent a document to Phuc Son Group regarding the implementation of financial obligations at the above-mentioned project with an amount of 11,994 billion VND.
This amount is based on the conclusion of the Central Inspection Committee in Announcement No. 680 in 2019 and a recent document from the People’s Committee of Khanh Hoa province.
Immediately after receiving the notification from the provincial People’s Committee requesting the above-mentioned amount to be paid, on August 8, 2022, the CEO of Phuc Son Corporation Nguyen Van Hau wrote a letter replying: “Regarding the amount to be paid which is 11,994.92 billion VND as requested by the provincial People’s Committee and the provincial Tax Department, the investor acknowledges that there is not enough legal basis to calculate, determine, and ensure the principle of fairness in implementing investment of projects according to the BT form (the approval of land prices in the Nha Trang airport area and the payment procedure for BT projects has not been implemented yet)”.
Currently, the violations related to projects and land in Nha Trang airport’s area “show signs of criminal offense” have been transferred by the Khanh Hoa provincial police to the investigative agency under the Ministry of National Defense for consideration and handling according to its jurisdiction.
Therefore, regarding the amount that the province has announced but Phuc Son Joint Stock Company has not accepted to pay into the state budget (11,994.92 billion VND), the provincial functional agencies state that they have to wait for the handling results by the investigative agency under the Ministry of National Defense or the court’s judgment to enforce the company’s obligation to comply.
