Hanoi court sentences Z Holding chairman to 30 years for company's fake milk powder

Hoang Quang Thinh, 31, received the jail term for three offenses, as concluded by a Hanoi court on Wednesday.

Following a ten-day trial, the Hanoi People’s Court found 18 defendants linked to Z Holding guilty.

The company’s three founders, Thinh, La Khac Minh and Nguyen Van Minh, were found guilty of three crimes, "violating accounting regulations causing serious consequences", "producing and trading counterfeit food products" and "money laundering."

Minh got 30 years and Minh got 28.

Fifteen others were charged with "violating accounting regulations causing serious consequences" or "producing and trading counterfeit food products," and got sentences of nine years to 15 months’ suspended imprisonment.

The first-instance court ruled that it was a particularly egregious case that infringed upon the state’s economic order governing commercial production and trading, food safety, consumer rights, and public order.

The court described as especially dangerous the production of counterfeit goods over a long period of time, in large volumes and a large variety, including milk meant for children and seniors.

The actions also eroded consumer trust, the court said.

It ordered the three founders to return all their ill-gotten gains.

The entire amount of these illicit profits is considered assets derived from unlawful acts; therefore, it shall be confiscated and remitted to the State budget, rather than being used for direct compensation to individuals or enterprises (except for specifically proven civil damages).

The trio did not plead "not guilty" but claimed they had not intentionally produced counterfeit goods, but acknowledged their responsibility to consumers who had placed trust in their products.

The defense argued that the milk products did not contain banned substances such as melamine, mycotoxins or heavy metals like arsenic, lead or mercury.

"It the products were unsafe, I would never give them to my family members to consume," Thinh said.

The presiding judge dismissed this, pointing out that the law clearly defines counterfeit goods and that "a product does not need to be toxic to be considered fake."

The milk powder had certain ingredients at below 70% of declared levels, meeting the criteria to be classified as counterfeit, he said.

According to the indictment, before 2023 Z Holding outsourced production to multiple factories to manufacture nutritional products, dietary supplements and foods for special diets.

Later it decided to build its own factory to better control quality, establishing the Nature Made brand to produce and sell products previously outsourced.

One of the defendants, Pham Duy Tan, production director and head of R&D at Nature Made, was in charge of formulating the new milk product.

When asked about the basis for the formula and whether he had "consulted other brands or scientific research," he told the court he "made it up himself."

He admitted to not consulting other sources or doing trial production or laboratory testing.

Companies related to Z Holding sold 4.2 million cans of 22 fake products, generating VND2.018 trillion in sales.

Thinh pocketed VND63.2 billion, Van Minh and Khac Minh got VND46 billion and VND40 billion, and the rest of the estimated VND 319 billion profits were shared among other people and various company funds.

The other charges were that the trio concealed more than VND7.825 trillion in revenues, causing the government tax losses of over VND1.633 trillion, and laundered VND83 billion through investment funds, stocks and real estate.