After Vinalines bought a very old floating dock from Russia through a Singapore-based broker in 2008, with approval of its then-chairman Duong Chi Dung, he and some others received a US$1.6 million kickback from the broker through a money-laundering trick. Dung and his accomplices are being tried in Hanoi.
Along with Dung, nine other defendants, including six former leading officials of the State-owned Vietnam National Shipping Lines (Vinalines), are in the dock at the Hanoi People’s Court on charges of “intentionally violating state regulations on economic management, causing serious consequences,” and “embezzlement.”
The Hanoi People’s Procuracy on Friday proposed that Duong Chi Dung, the ex-chairman of Vinalines, and Mai Van Phuc, the former CEO of the State-owned corporation, be sentenced to death for their offenses.
The prosecutor’s office also proposed sentences ranging from 6 years to 30 years in jail for the other eight defendants.
According to the indictment, on June 27, 2007, Duong Chi Dung, who was the corporation’s new chairman at that time, signed a decision to approve the plan to set up a large ship repair plant in southern Ba Ria – Vung Tau Province without waiting for the directive from the Prime Minister.
In late 2007, Dung approved the plan to purchase an old 83M floating dock from a Russian company, citing the reason that the dock would serve the operation of the plant.
The dock, which was built in 1965, was later bought for as much as US$9 million through a Singaporean broker, AP Company, causing a loss of VND366 billion (now US$17.26 million) to the State budget.
Not only that, Dung and his accomplices also received $1.666 million as a kickback for the deal that involved four parties: Vinalines, Nakhodka – the Russian company that owned the dock, AP, and Russia-based Global Success, a broker representing Nakhodka.
Meanwhile, as the dock was bought before the ship repairing plant project was approved, there was no place to install and utilize the facility. Consequently, Vinalines had to dock the floating dock at Go Dau Port in Dong Nai, which resulted in huge expenses for port leasing, bank loan interest, and repairing costs.
Four parties enjoy $9 mln
The floating dock, which was made in Japan in 1965, had been denied registry by the Russian register agency since 2006. Therefore, Nakhodka offered to sell the facility through some brokers.
On August 2-5, 2007, a working group including Mai Van Khang, the then CEO of Vinalines, Tran Hai Son, the then CEO of Vinalines Shipyard Co Ltd, Tran Huu Chieu, the then deputy CEO of Vinalines, and Le Van Duong, a registry official at Vietnam Registry at that time, made a trip to Nakhodka in Russia to look at the dock.
Nakhodka offered to sell the dock, which was in damaged condition, for less than $5 million, but the group did not deal with Nakhodka’s representatives but contacted and negotiated with Goh Hoon Seow, managing director of AP, about purchasing the dock.
Upon returning to Vietnam, Chieu and Son reported the trip’s results to Dung and Phuc, who later decided to buy the dock through AP.
On February 15, 2008, the Board of Management of Vinalines issued a decision, signed by Dung, to adopt a plan to buy the dock through AP and repair it before transporting it to Vietnam. The total cost of the plan was US$19.5 million, of which US$9 million was the buying price of the dock.
A month later Phuc signed Contract No. 01-07/VNL-AP with Goh Hoon Seow to buy the dock at such a price. From March 17 to June 13, 2008, Vinalines made two bank transfers totaling $9 million to AP’s account at the Singapore-based United Overseas Bank (UOB).
In fact, according to the indictment, Dung and Goh Hoon Seow has had a close relationship since 2000. Before the contract was signed, the Singaporean businessman had arrived in Vietnam to meet Dung and Phuc, suggesting Dung to buy the dock through AP, and Dung agreed to the suggestion.
AP, before signing the above contract with Vinalines, had signed another contract with Nakhodka to buy the dock for only US$2.3 million. AP also signed an agreement with Russia-based Global Success, another broker, to carry out the transport of the dock from Russia to Vietnam.
According to the Hanoi prosecutor’s office, the amount of $9 million paid by Vinalines to AP was actually divided into four parts under agreement among the related parties. Accordingly, Nakhodka got $2.3 million, AP received $700,000, Global Success received $4.334 million, and Vinalines enjoyed the remainder, $1.666 million as a kickback.
Kickback paid via laundering
Before AP transferred the $1.666 million to Vietnam, Goh Hoon Seow told Son that they needed to select a company based in Vietnam as the receiver of the money to be transferred.
Son then suggested that Tran Thi Hai Ha, his younger sister, let him use the name of her company, Phu Ha Company, located in Hai Phong City, as the beneficiary of the money. Ha agreed to this suggestion.
The two men also made a bogus contract between AP and Phu Ha, in which AP would make an investment of $1.666 million in building an Inland Container Depot (ICD) in Hai Phong. This contract would form a legal basis for the UOB to transfer the money as an investment to Phu Ha.
After such preparations for the money laundering were completed, on June 18, 2008, AP transferred the kickback to Phu Ha’s account at UOB’s Ho Chi Minh City Branch.
Ha later withdrew the amount in cash in VND (more than VND28 billion) and handed it to her brother Son, who later gave Dung and Phuc VND10 billion (now $480,000) each. Son took VND6 billion himself and gave Ha VND2 billion, and Tran Huu Chieu, Vinalines former deputy CEO, VND340 million.
Investigators said Ha did not know her brother had taken advantage of her account to get the embezzled money. She also returned the money to the investigators, and was thus not charged with embezzlement.
The ongoing trial will continue on Monday and the jury is expected to hand down sentences on the ten defendants that afternoon.