How stock exchange leaders helped FLC chairman scam $146M

The police have recommended that the four be charged with stock manipulation and fraudulent appropriation of assets.

They are former chairman Tran Dac Sinh, deputy CEO Le Hai Tra, former deputy CEO Tram Tuan Vu and listing management and evaluation director Le Thi Tuyet Hang.

They have been recommended to be charged with abusing their position and power while performing official duties. All have been arrested except Hang.

Three other people are recommended to be charged with publishing false information or concealing information in securities activities.

They are Le Cong Dien, head of the department of supervision of public companies under the State Securities Commission of Vietnam, Duong Van Thanh, CEO of the Vietnam Securities Depository (VSD), and Pham Minh Trung, head of VSD stock registration department.

Trinh Van Quyet and seven others are being investigated for stock manipulation and fraudulent appropriation of assets.

Thirteen other people are being accused of stock manipulation and 22 with fraudulent appropriation of assets.

The police said that Faros Construction was originally a loss-making company that Quyet bought and changed the name several times.

After years of inactivity, starting from April 2014, the company began to receive orders to construct property projects for FLC.

In the beginning the company had VND1.2 trillion in charter’s capital but the figure was falsely inflated to VND3.1 trillion between 2014 and 2016. Quyet ordered his two sisters and other leaders of Faros to inflate the number.

Eventually the capital was raised to VND4.3 trillion illegally.

Quyet then listed Faros as a public company on the HoSE, Vietnam’s biggest stock exchange, with the help of four leaders of the bourse.

Sinh, then chairman of the bourse, knew that a financial report of Faros in 2014 and 2015 pointed out that there was not enough evidence to prove the actual charter capital of the company.

But he ordered his subordinates to help list Faros on the stock market because he had a personal relationship with Quyet and former FLC CEO Doan Van Phuong, who is now in hiding.

Although the evaluation and approval of the listing on the HoSE was not the responsibilities of the board of directors, Sinh ordered the listing council to report the evaluation result of Faros to him.

Sinh and the directors of HoSE then approved to list Faros on the exchange starting at VND10,000 per share.

Tra, who is Sinh’s subordinate, was in charge of evaluating and deciding whether a company should be listed on the bourse.

He and other members of the listing council at first agreed that Faros was not able to prove its charter capital and asked the company to clarify.

But when the company submitted its clarification, Tra and the council members approved its listing immediately without carefully studying the report.

Tra admitted to the police that he helped the company list because he had personal relationships with Quyet and Phuong.

Ho Chi Minh Stock Exchange deputy CEO Le Hai Tra. Photo courtesy of the exchange

Dien, as head of the department of supervision of public companies, found out that Faros did not provide enough evidence of capital contribution but still approved for its shares to be listed with a charter capital of VND4.3 trillion.

He did that because he felt pressure as Faros was a big company and Quyet had relationships with many officials.

Dien did ask Faros to provide further evidence, but the company said that he was "doing things beyond his authority and causing difficulties for the company."

Dien therefore went forward with approving the listing, knowing that it was wrong.

In August 2016, Faros was approved by the VSD to list 430 million ROS shares at VND10,000 apiece. ROS a month later was officially listed at VND10,500.

After Faros was listed, Quyet told his subordinates to use various tricks to increase the company’s charter capital twice more to VND5.6 trillion, to attract even more investors to buy shares.

From September 2016 to March 2022, Quyet told his sister Hue to sell nearly 400 million ROS shares to 30,400 investors, collecting VND4.8 trillion.

He was accused of stealing VND3.6 trillion from investors and using it for other purposes than intended.