Hanoi police have just arrested and prosecuted Nguyen Hoang Long, chairman of a real estate company in Hanoi, for allegedly swindling hundreds of billions of VND from investors.

Vinh Hung Dominium project remains on paper

Long, Chairman of Council of Members of the Vinh Hung Housing Trading Limited Company, was detained for initially allegedly appropriating nearly VND30 billion from SeaBank. Long is also chairman of Vina Megastar, an investor in several big real estate projects in Hanoi.

According to the investigative agency, in order to get money for his company’s projects, Long used these projects as collateral at major banks for loans, along with collecting hundreds of billions of VND from customers.

The projects are at a standstill, meaning the customers may have lost their investments.

He also is said to have set up eight other companies in order to gain capital.

One of the major projects is Vinh Hung Dominium, in Hoang Mai District, run by Vinh Hung Company. It was supposed to be a trade centre with two buildings, one 25 stories and another 35 storey building surrounding housing, encompassing 12,399 square metres.

After the inception of the VND1.5 trillion (USD71.3 million) project in January 2011, Vinh Hung Company had mobilised capital from hundreds of costumers via a real estate transaction floor under the name of Ha Long Trade and Housing Investment and Development JSC.

To date, however, the project has not broken ground and investors cannot reach the company representatives.

In order to get money for the construction, Vinh Hung Company used the project as collateral to borrow VND400 billion (USD19.01 million) from Bao Viet Commercial Joint Stock Bank's Hanoi branch.

As part of the conditions for the loan, Vinh Hung Company was required to buy steel from Livestock Breeding Development and Construction JSC.

However, there was some "misunderstanding" between the two companies, and Bao Viet Bank claimed they had sent VND225 billion (USD10.7 million) to Livestock Breeding Development and Construction JSC but Vinh Hung Company had yet to receive the expected steel.

The case is under continuing investigation in order to find out where these funds ended up.