Opinion
When buying high and selling low makes sense
  • By Bui Hoang Tam | dtinews.vn | March 05, 2016 06:08 PM

Even though the Vinalines and Vinashin cases have ended and the guilty sentenced, the scandal continues to play out.

 

Vinalines proposed to sell the dock to recoup some of the losses

In 2007, former Chairman of Vinalines Duong Chi Dung spent USD9m on buying a floating dock which had been removed from active service by the Russian Maritime Register of Shipping. About USD5.1m was spent on repairing the dock but it remained unfit for use.

In February, Vinalines proposed to sell the dock to recoup some of the losses. However, due to it deteriorating condition and low steel prices, the dock now only worth USD1.6m. Vinalines suggested holding an auction to sell the dock as soon as possible.

There are many sayings about buying high and selling low being the description of unskilled or unlucky businesspeople. While the original purchase may have looked foolish on the surface, it can be argued it was a wise calculation because the buyers were able to embezzle state money due to the unrealistically high high price for the obsolete dock.

At the hearing for Duong Chi Dung, it was disclosed that the dock's real price at that time was only USD2m. If Dung had bought the dock at that price then even with USD2.4m of repairing and maintenance fees added to the sum, the losses would not have been too unbearable. But instead Dung wrote off USD9m just to buy the dock.

Even though Dung and his accomplices caused huge losses to the state budget, they have failed to provide anywhere near adequate compensation. Dung and his accomplices were asked to return nearly VND359bn (USD17.1m). The court also decided to seize Dung's three houses in Hanoi and former General Director Mai Van Phuc's house in Quang Ninh.

However, as of last August, only VND13.4bn have been repaid, of which Dung paid VND5.2bn, Phuc paid VND3.9bn, Tran Huu Chieu, former deputy general director of Vinalines, paid VND340m and Tran Hai Son, former director of Vinalines, paid VND4bn. This is well short of the figures involved and their assets will not cover the debt.

In 2012, the former Vinashin executive was blamed for losses of more than USD43 million, most of which came from the illegal procurement of an Italian-made high-speed passenger vessel and two electric generators. Former chairman Pham Thanh Binh was asked to repay USD23.8m and pay USD31,000 court fee but he said flat out that he did not have the money.

Based on these kinds of issues and the way in which state agencies work, it's no wonder that the country has incurred rising bad debts.

Hopefully cases such as those involving Vinalines and Vinashin will never happen again.

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