A dear price to pay

The news about Nguyen Duc Kien’s arrest on Monday, Aug 20 came out as a deafening explosion, not only because of his status as one of the richest investors on the local stock exchange, not because of his deep involvement in the country’s banking sector, and not because of his overwhelming power in national soccer. Rather, it is the high price he has to pay for what is described as illegal business conducted via three companies at his helm in Hanoi. And, given the massive cash withdrawals in the past three days at Asia Commercial Bank where he used to serve as a senior leader, and the panic on the local stock market, it is also the colossal price the public has to pay. The saga continues.

Tuoi Tre sheds light on Kien’s illegal business practices, saying he has set up “fraudulent business schemes” to take out bank loans.

“Although the three companies are not licensed to make financial investments, Nguyen Duc Kien still used the companies’ legal persons to engage in financial investment business,” says the paper.

With the huge chartered capital registered for the companies, Kien with his own prestige in the finance-banking sector has built up images of his companies as being highly capable in business and economic efficiency, and then mapped out large-scale business projects. Tuoi Tre says investigators now suspect that “all these large-scale business projects are ‘virtual ones’ designed to win confidence of customers and banks that invest in Kien’s companies.”

The paper also provides facts regarding such business schemes. Many times in 2008 and 2010, Kien issued corporate bonds to banks, collecting hundreds of billions of dong, which was then used by his family to buy shares of other banks. The trick was a never-ending cycle, as Kien then used such shares as collateral to take out loans from banks that had purchased bonds of his companies, and such loans were then to refund banks and for his own uses.

This trick is termed ‘illegal business practice’ and police suspect that the amount of bank loans manipulated by Kien might be as much as trillions of Vietnam dong, says Tuoi Tre.

In the wake of his arrest on Monday, Aug 20, trillions of Vietnam dong has been withdrawn from ACB, and the bank’s agony still continues. And, the price to pay is even greater as within just three days some VND53 trillion has evaporated from the Hochiminh Stock Exchange alone, according to figures given yesterday by the stock market watchdog.

A dear price to pay, Saigon Times, Aug 24, 2012