On June 20, 2024, the Investigation Police Agency of Di An City Police (Binh Duong province) concluded the investigation of a case of “Non-compliance with sentences” and “Tax evasion” occurring at Tan Tan Joint Stock Company – a famous peanut processing company in Vietnam for decades.
Mr. Tran Quoc Tan, the founder of the brand and former Chairman and Director of the company, was accused of tax evasion and non-compliance with civil judgments.
The indictment of the People’s Procuracy of Di An City has just prosecuted Mr. Tan for the crimes of Non-compliance with judgments and Tax evasion pursuant to Articles 380 and 200 of the Criminal Code.
CASE DEVELOPMENT
In its golden days, the company had more than 140 distributors and over 40,000 retail outlets in most supermarkets and shopping centers, accounting for 80% of the market share in the country. The enterprise also successfully exported to the US, Australia, China, Japan, Russia, Sweden, Taiwan, and Hong Kong…
Tan Tan Joint Stock Company was established in Binh An Ward, Di An City, with three shareholders from the same family: Mr. Tran Quoc Tan (80% of the charter capital), Mrs. Chau Ngoc Phung (Mr. Tan’s wife, 10%), and Mr. Tran Quoc Tuan (Mr. Tan’s brother, 10%).
Mr. Tan was the General Director and legal representative, while Mrs. Phung and Mr. Tuan were both Deputy General Directors.
In mid-2011, Mr. Tan transferred 3,666,666 shares to Mrs. Nguyen Thi Thanh (born in 1962, residing in District 10, Ho Chi Minh City) at a price of VND 11 billion (equivalent to 45.83% of the shares). The company issued a certificate of share ownership to Mrs. Thanh but did not record it in the shareholders’ book. Mrs. Thanh requested to convene a shareholders’ meeting but was not accepted.
In 2012, Mrs. Thanh filed a lawsuit requesting the court to recognize the share transfer contract so that she could be entered into the shareholders’ book and exercise the rights of a shareholder.
In 2012 and 2013, the Di An and Binh Duong Courts successively tried the case in the first and second instances, accepting Mrs. Thanh’s request: Recognizing the share transfer contract; Mrs. Thanh was entered into the shareholders’ book and registered as a shareholder with the competent authority.
Since 2012, although their term of office had ended, the old Board of Directors did not organize a general meeting to elect a new Board of Directors. Mrs. Thanh sent four requests to convene a general meeting of shareholders to elect a new Board of Directors. As of 2014, Tan Tan Company had to enforce 31 judgments with a value of VND 19.5 billion and other debts with a total outstanding balance of about VND 300 billion; many times larger than the owner’s equity. Therefore, Mrs. Thanh requested the company to provide financial statements from 2011 to 2015 and mandatory audits to determine the exact situation of losses and the responsibility of the old Board of Directors for the company’s losses.
However, these requests were not met. At the end of 2015, Mrs. Thanh continued to file a lawsuit requesting the convening of the Board of Directors and asking Mr. Tan to hand over books, contracts, and accounting documents for mandatory audits.
The court later ruled that the Board of Directors must convene an extraordinary general meeting of shareholders to elect a new Board of Directors and allow Mrs. Thanh to examine, transcribe the minutes, resolutions, and financial statements of the company.
The judgment took effect, but the old Board of Directors did not comply. The enforcement agency sent a written request to the police to initiate a criminal case against Mr. Tan, Mrs. Phung, and Mr. Tuan for “Non-compliance with judgments.” At the same time, Mrs. Thanh filed a complaint against Mr. Tan for “Tax evasion.” In December 2022, the police initiated a case of “Non-compliance with judgments” and “Tax evasion.”
It was not until early 2024 that Mrs. Thanh was able to convene a general meeting of shareholders to elect a new Board of Directors of Tan Tan.
The report of the Board of Directors of Tan Tan Joint Stock Company at the 2024 Annual General Meeting of Shareholders states that at the meeting of the Board of Directors on May 28, 2022, Mr. Le Hong Phuong was elected as Chairman of the Board of Directors and appointed as Director and legal representative. Mr. Tran Quoc Tan was dismissed from the position of Director and Legal Representative.
On January 11, 2024, Tan Tan Joint Stock Company was granted a new business registration certificate.
Tan Tan Joint Stock Company requested Mr. Tran Quoc Tan to hand over work, documents, books, records, assets, debts, etc., to the new management, but Mr. Tan and the old leaders (Mr. Tuan and Mrs. Phung) did not comply. The new Chairman, Mr. Le Hong Phuong, was prevented from entering the company’s headquarters when he arrived.
The entire premises of the headquarters have been illegally occupied and managed by Tan Tan Trading – Production – Cultivation One-Member Limited Company, owned by Mr. Tran Quoc Gia Phuoc (son of Mr. Tran Quoc Tan).
The Board of Directors’ report states that as of January 31, 2024, the company owed nearly VND 62 billion in taxes and VND 6.2 billion in social insurance as of March 2024. The company also owes creditors under more than 50 judgments that have taken effect, and the company has been sued by the Vietnam Joint Stock Commercial Bank for Industry and Trade, which has seized 2/5 of its assets, and by Vietcombank to seize the remaining assets.
CONCLUSION OF THE TWO CASES
In the case of “Tax evasion,” the investigation conclusion dated June 20, 2024, determined that Tan Tan Company suffered losses and ceased operations in 2013. In 2015, Mr. Tan allowed Tan Tan Trading – Production – Cultivation One-Member Limited Liability Company (Tan Tan 2, represented by Mr. Tran Quoc Gia Phuoc, son of Mr. Tan and Mrs. Phung) to rent a part of the factory of Tan Tan Company for VND 100 million/month, later reduced to VND 70 million/month, with a lease term until 2030.
In 2015, Tan Tan Company was in tax arrears and was enforced by the tax agency by announcing the invalidation of invoices. The company submitted documents and was allowed to use retail invoices and pay 30% tax on sales revenue.
From July 2015 to November 2022, Tan Tan Company rented its factory to Tan Tan 2, earning VND 8.6 billion but did not issue invoices or report taxes, thereby evading taxes worth nearly VND 1.5 billion.
According to the Investigation Agency, the factory and warehouse leasing was solely decided by Mr. Tan without going through the Board of Directors or the treasurer and accountant. The members of the Board of Directors were unaware and did not receive any dividends from the rental income, so only Mr. Tan committed the crime of “Tax evasion.”
In the case of “Non-compliance with judgments,” the Investigation Agency initiated a case against Mr. Tan and Mr. Tuan. Regarding Mrs. Phung, the conclusion stated that she did not participate in the management and business activities of the company and, at the same time, had 9.77% of her shares auctioned off in 2017 (with only 0.23% remaining), so she was not considered to have committed a crime.
Analyzing Mr. Tan’s motive, the Di An City Police investigation determined that Mr. Tan and his wife and brother had the conditions to execute the judgment but did not do so because if they had, a new Board of Directors would have been elected, and Mrs. Thanh, with her 45.83% stake, would have led the company instead of Mr. Tan.
