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Equitization scandal rocks Tien Giang Province
Since May 10, the authorities in the upper Delta province of Tien Giang have been struggling to explain why they sold tourism assets for a song to a Viet-Kieu businessman. This story summarizes a series of exposés on Tuoi Tre Newspaper.
The local public wants to know why the assets of the Tien Giang Tourism Company were equitized at a dirt-cheap price and now are wholly owned by the family of the Vietnamese-American investor Hoang Kieu.
Province Vice Chairman Nguyen Van Khang told Tuoi Tre reporters that the officials who managed the company’s equitization have retired and the current officials don’t know the details. He has asked the Department of Planning and Investment to review and report on the case.
Hoang Kieu buys the Tien Giang Tourism Company for a song
Tien Giang Tourism Company was one of the larger state-owned enterprises in Tien Giang, recounts Tuoi Tre. It owned hotels, restaurants and tourist sites near My Tho City, altogether 216,000 square meters of well-located property.
The sites included the modern, seven-story Song Tien Hotel and the five-story Huong Duong Hotel, the Song Tien and Trung Luong Restaurants, a Tourism Centre is on 30/4 road, and the Thoi Son Islet Resort. It also developed the Tan Thanh beach resort in Go Cong Dong. All are popular destinations in Tien Giang.
In November 2004, Tien Giang Province Chairman Tran Thanh Trung signed a decision specifying the value of the Tien Giang Tourism Company at 19.06 billion dong ($1.4 million), including 6.04 billion of state capital. In that year, the firm reported net profits of over 874 million dong, 26 percent more than in the previous year.
The firm’s assets were officially certified at the end of 2003 as follows: the 2300 square meter Song Tien hotel (Only 2.73 billion dong), the Huong Duong hotel (only 369.5 million dong) and the Trung Luong restaurant (1.25 billion dong). The same official document stated that the province owned 51 percent of the company’s 700,000 shares, its employees held another 29 percent, and the remainder, accounting for 20 percent of the chartered capital, would be sold to the highest bidder.
At that time many officials considered the valuation too low, but the provincial people’s committee didn’t change its mind.
Then on January 12, 2005, the local government decided to turn Tien Giang Tourism Company into Tien Giang Tourism Joint Stock Company, with only seven billion dong of chartered capital, equivalent to 700,000 shares valued at 10,000 dong each. The firm’s director, Tran Thanh Tien, explains that though the company owned assets worth 19 billion dong, it owed creditors 12 billion dong, so its real value was only seven billion dong, about $370,000.
In November 2008, the state still held 30 percent of Tien Giang Tourism JS Company. Large private shareholders included the American businessman Hoang Kieu (30 percent) and Dao Thi Lan Phuong, Hoang Kieu’s relative, 34 percent. Then on January 19, 2009, the State Capital Investment Corporation (SCIC) decided to auction all state-owned shares in this company at a starting price of 31,000 dong per share.
In March 2009, through An Binh Securities Trading JS Company, all 210,000 state-owned shares were auctioned. The winning bid was 7.56 billion dong, or 36,000 dong per share, offered by Hoang Sammy Hung (Hoang Kieu’s son). Now, according to documents at the Tien Giang Tourism JSC, 100 percent of this firm’s shares belong to Hoang Kieu’s family.
Hoang Kieu is the same person who won the right to promote the 2010 Miss World pagent in Nha Trang City (Khanh Hoa). Late in 2009, after Khanh Hoa province had committed major funding and public resources to the pageant, Kieu announced that the venue would be shifted to My Tho and staged at the Thoi Son Island resort which – as shown above – is one of Tien Giang Tourism JSC’s properties. At that point, the plan to bring the pageant to Vietnam turned into a debacle.
“We are completing formalities to raise chartered capital for Hoang Kieu,” says Tien Gian Tourism JSC director Tran Thanh Tien.
New developments
Phan Thanh Hien, Director of the Tien Giang Department of Natural Resources and Environment, said that Hoang Kieu recently asked the province to hand over 1000 square meters of land adjacent to his Song Tien Hotel in My Tho City.
Kieu claimed this plot of land because in September 2000, a provincial vice chairman agreed to allocate this piece of land to Tien Giang Tourism Company to build a hotel. At that time, the company was still state-owned, so it was legal for the provincial government to grant land for the firm’s use.
Now that the company has been privatized, Hien pointed out, Kieu’s claim is irrational. He must lease that plot of land.
Lawyer Vo Tuan Vinh Thuy represents Nguyen Van Tu of Thoi Thuan hamlet, Thoi Son commune, My Tho city. Thuy said that he is preparing to sue Hoang Kieu, Chairman of Tien Giang Tourism JS Company for failure to pay his debts.
According to the lawyer, Hoang Kieu bought 2.3 hectares from Tu for 30 billion dong in June 2009 to build the Thoi Son eco-resort. Though Tu transferred ownership of this piece of land to Hoang Kieu’s company, he is still waiting for 18 billion dong (Nearly one million dollars).
At Tu’s request, the Thoi Son Commune People’s Committee on March 21 invited Hoang Kieu to come in to discuss a settlement. Kieu sent Director Tran Thanh Tien of Tien Giang Tourism JSC Company Tran Thanh Tien to the meeting, and Tien committed to pay off the debt by May 30 2010. Hoang Kieu has built structures on Tu’s land though he still owes Tu.
Explanations and comment by Tien Giang officials
Interviewed by Tuoi Tre, Tien Giang Party Secretary Tran Thi Kim Cuc said that the Tien Giang Party Committee has asked inspectors to investigate why the Tien Giang Tourism Company was valued so cheaply and why Hoang Kieu’s family was able to buy all of the state’s 51 percent interest in two auctions.
Cuc herself has been linked to various irregularities and is under investigation. Questioned on these, Cuc said she didn’t know who stands to gain by discussing internal Party affairs in public, and until the charges are resolved, she would make no comment.
On May 12, Tien Giang province Chairman Tran The Ngoc authorized Nguyen Van Chien, chief of the government office and the spokesman of Tien Giang People’s Committee, to answer Tuoi Tre about the equitisation of Tien Giang Tourism Company.
He said: “I confirmed that there no irregularity in the valuation of the Tien Giang Tourism Company. The evaluation council set the value of this company based on a government circular dated September 12, 2002. The valuation of the company took account of its profits in the three previous years (220.7 million dong), but didn’t consider the value of the land it uses because the firm’s land is managed by the People’s Committee, which leases it to the company.”
Tuoi Tre: Why didn’t the evaluation council consider the lucrativeness of the company’s hotels and restaurants, all in prime locations?
Nguyen Van Chien: Regulations effective at that time (2003) didn’t address that, and that’s why the valuation of the Song Tien Hotel was so low, as you’ve reported. If the company were to be valued at this moment, surely its value would be much higher than seven billion dong. Some members of the People’s Committee questioned the valuation then, and the Board for Enterprise Renovation and Development recalculated; the hotel’s valuation was increased by 568 million dong.
Tuoi Tre: Why didn’t the province hold on to its 51 percent share in that company? Why was Hoang Kieu’s family able to buy all the state-owned shares in two auction rounds?
Chien: According to regulations, the state doesn’t need to hold a majority share in equitized tourism companies. After publicly auctioning 140,000 shares of the company’s 300,000 registered shares, the People’s Committee decided to sell another 63,000 shares. One investor bid 60,100 dong per share, but then he withdrew. The province had to organize a second auction. Only two investors entered bids, Tong Linh Giang Company and Hoang Kieu. Hoang Kieu won the auction by bidding 45,200 dong per share.
In May 2007, Tien Giang provinve transferred the remaining state capital (2.1 billion dong, 30 percent of the chartered capital) in Tien Giang Tourism to the State Capital Investment Corporation (SCIC). In March 2009, SCIC auctioned the remaining state shares. This time Hoang Sammy Hung (Hoang Kieu’s son) won the auction by bidding 36,000 dong per share.
Tien Giang publicized the two first auctions of shares by taking advertisements in Ap Bac, a local paper, and Saigon Giai Phong. SCIC announced the third auction in Ap Bac. I don’t know why Hoang Kieu knew about and successfully bought the shares in two consecutive auctions. However, I confirm that everthing was done transparently.
Tuoi Tre: It is said that Hoang Kieu is developing his Thoi Son resort even though he hasn’t paid the local people what he owes them for the land and he doesn’t have a construction licence. Is that true?
Chien: In December 2009, the My Tho City People’s Committee granted a construction licence for the 3969 square meters of the Thoi Son resort already covered by a valid land use rights certificate. We’ve heard that some structures built on this site don’t have a licence yet. The People’s Committee has asked related agencies to investigate.
Tuoi Tre: Recently Hoang Kieu asked the province to hand over 1000 square meters of land next to the Song Tien hotel. We know that this is state-owned land, not property of Hoang Kieu’s Tien Giang Tourism JSC. How will the People’s Committee deal with it?
Chien: In 2000 the People’s Committee allocated this piece of land for the expansion of the Song Tien hotel, which was a state-owned hotel at that time. This piece of land is now designated to build a park, so it will not be given or even leased to Tien Giang Tourism JSC.
Tuoi Tre: Why did Tien Giang ask the government to agree to move the Miss World 2010 Pagent from Khanh Hoa (Nhatrang City) to Tien Giang (My Tho)? Was this Hoang Kieu’s proposal? Before he withdrew as promoter of the pagent, did he discuss that with the provincial People’s Committee?
Chien: When Hoang Kieu bought the remaining shares of Tien Giang Tourism JSC and invested in the Thoi Son resort, he asked Tien Giang People’s Committee to move the Miss World 2010 Pageant from Nhatrang to Tien Giang. The People’s Committee agreed and asked for the government’s permission because Hoang Kieu had the capability to organize the pagent in Tien Giang. However, when we learned that Khanh Hoa province didn’t agree (At which time the central government’s decision was still pending), we withdrew the petition, without consulting Hoang Kieu. At the same time, we proposed that Tien Giang be permitted to host the Miss World pagent in 2011 or 2012.
vietnamnet, Tuoi Tre
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