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How did Nguyen Duc Kien get rich with fake projects?
Issuing corporate bonds and false business plans for real money from banks were the main illegal trading tactics ofarrested banking mogul Nguyen Duc Kien, said a central police agency under the Ministry of Public Security.
By establishing three companies with functions and lines of business that are not related to financial investment, Kien has used the legal status of the companies to issue corporate bonds to some banks, said the Investigation Police Agency.
He then used this money to buy shares of many banks, and mortgaged the shares at those banks to take real money for debt repayment and personal expenditure, the agency said.
All of these actions are in contravention of regulations, it said. But the names of those related banks have not yet been revealed.
As announced by the agency earlier, the arrest and prosecution of Nguyen Duc Kien is based on written complaints of law violations that occurred at the three companies, namely B&B Trade and Investment Joint Stock Co, ACB Hanoi Investment Joint Stock Co, and Asia Financial Investment Co Ltd.
Kien, who is chairman of the boards of management of all the three firms, may face a criminal trial under Article No.159 of the Penal Code, which refers to illegal trading activities.
The three Hanoi-based firms, which have a combined registered capital of VND2.3 trillion ($110.44 million), operate in civil engineering - housing construction, real estate, hotel-catering services, and trading.
False plans for real money
Although all three companies say they have no financial investment functions, Nguyen Duc Kien still used their legal entities to participate in the financial sector.
With huge amounts of capital and their reputation in the field of finance and banking, Kien has built up an image of economically powerful companies with high economic efficiency.
From there, he set up big business plans in order to improve the company's asset values and create a strong financial reputation.
The police agency said they suspect these business plans are all unlikely plans which were drawn up to gain the trust of customers and banks so that Kien could use other people’s money in unauthorized financial investments.
After building the image and reputation for his companies, in 2008 and 2010, Kien issued corporate bonds many times and sold them to banks for hundreds of billions of dong.
Kien then delivered this money to his family members so that they could use it to buy shares of other banks.
After buying these shares, Kien used the shares as collateral for bank loans from where he had sold the bonds to get money for dividend and debt repayments, and personal purposes.
According to Tuoi Tre sources, B&B Trade and Investment Joint Stock Co and Asia Financial Investment Co Ltd own a 1.99 percent and 2.01 percent stake in the Vietnam Export-Import Commercial Joint Stock Bank (Eximbank – coded EIB).
Thus, with only a 0.21 percent EIB share under his name, Kien was not a major shareholder of Eximbank, as he claimed.
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