Former Deputy PM warned over steel project violations

Hai, Deputy Prime Minister of Vietnam between 2007 and 2016, had committed several violations in overseeing the expansion of state-owned steel company TISCO (TISCO II project), the Politburo concluded at a meeting Friday.

Hai, now serving as Hanoi's Party Secretary and a member of the Politburo, showed irresponsibility and did not carefully consider inputs from ministries and departments. He also failed to provide clear directions, which was not in accordance with the EPC contract of the TISCO II project and governmental procedures regarding construction material prices.

Furthermore, Hai gave directions on adjusting the total investment on the TISCO II project and the provision of preferential credit that violated investment credit and export credit regulations.

He displayed a lack of supervision and failed to provide supervisory instructions in accordance with governmental procedures, which led to changes to the EPC contract that altered its nature and broke its managerial principles.

Hai also agreed to let TISCO pay some expenses for the EPC contractor, the China Metallurgical Group Corporation (MCC), another violation of the contract.

Hai’s violations and mistakes were serious, leading to public frustration and negatively affecting the reputation of the Party organization, the Party Central Office said.

The TISCO II project, approved in 2005, had a total capital of over VND3.8 trillion ($242 million). It had two main packages, one of them an EPC package regarding development of a metallurgy processing line.

The EPC package was auctioned to the MCC for over $160 million. However, the Government Inspectorate discovered in February that the project’s total capital had been illegally altered by TISCO, from over VND3.8 trillion to VND8.1 trillion.

Furthermore, at the time of discovery, TISCO had already paid MCC over 92 percent of the total value of the project, but the project was nowhere near completion. As of 2013, the EPC contractor MCC and contractors had stopped all construction activity.

Since then, some project equipment have been damaged, further impacting the project’s progress and quality, causing investment capital losses, inspectors said.