Scandal Trial Begins for Vietnam Shipbuilding Company Executives

By MarEx 2012-03-28 12:03:07

Former leading Vietnam executives have begun trial under accusations of bringing one of the country’s largest state-owned companies to the edge of bankruptcy after allegedly violating regulations.

The Vietnam Shipbuilding Industry Group (Vinashin) accumulated debts of more than $4 billion due to rapid expansion. BBC reports that this sparked reasonable fears in Vietnam investors. Nine company officials, including ex-chairman Pham Thanh Binh, are fighting claims of huge causing losses. A conviction in this case could result in 20 years in jail for any of the employees.

Developed in 1996, Vinashin was on its way to becoming one of the world’s top shipbuilders. Now, all of the defendants, charged in November 2011, are allegedly responsible for intentionally violating state regulations on economic management.

The main argument in the legal case surrounds $43 million in losses supposedly connected to the purchase of ships without government authorization, in addition to power plant projects that proved unsuccessful. The trial is scheduled to end on Friday. An international warrant has also been issued for two former executives who have not been taken into custody.

Following this scandal, Vietnam’s credit rating was reduced and Vinashin was noted as one of the main reasons. BBC again reports that, in 2010, Vinashin defaulted on its first payment on a $600m loan to creditors. The government had said while the global economic crisis had caused the cancellation of two-thirds of ship orders, Vinashin's troubles were also due to mismanagement.

Mr Binh is considered to be close to Prime Minister Nguyen Tan Dung, who appointed him to office.