Vietnam probes former top execs at state fuel giant over $61 million loss

By Ba Do   June 20, 2017 | 04:13 pm GMT+7
Vietnam probes former top execs at state fuel giant over $61 million loss
Dinh Vu polyester fiber and yarn factory has been shut down since September 2015 after making huge losses in one year. Photo by VnExpress

The former leaders are being held responsible for 'ineffective' operation at a textile plant that was shut down after just over a year.

The Ministry of Public Security is pressing criminal charges against five former executives of state-owned fuel giant PetroVietnam following huge losses at a textile factory.

The five people are facing charges of “deliberately violating state regulations on economic management, causing serious consequences" at the Dinh Vu Polyester manufacturing plant.

Government inspectors found that PetroVietnam and the state-owned textile giant Vinatex had opened the polyester fiber and yarn factory in the northern port city of Hai Phong with a VND7 trillion ($308 million) investment, of which PetroVietnam held a 74 percent stake.

But various investment and construction violations rendered the plant’s operations ineffective, they found.

The venture, also known as PVTex, incurred losses of more than VND1.4 trillion ($61.6 million) before it was shut down in September 2015, just over a year after it was opened.

According to media reports last year, the factory had spun itself into a financial mess with uncompetitive products and escalating costs.

Aiming to meet 40 percent of local demand for staple fibers and 12 percent for yarns, PVTex was never able to live up to expectations. Its products were more expensive than its competitors, and quality was inconsistent.

The factory had a stockpile of more than 9,400 tons of staple fibers and yarns by the time it was shut down.

Production costs at the plant were also unusually high. Its electricity bill for the year reportedly hit $12 million compared to an original estimate of only $4.7 million, while its workforce expanded to more than 1,000 people, more than twice as many as planned.

The textile factory is among a number of scandals that have effectively ended the political career of Dinh La Thang, PetroVietnam's chairman from 2009 until 2011. Last April, he was dismissed from the Communist Party's decision-making body and fired as the Party chief of Ho Chi Minh City.