PetroVietnam corruption trial: Defense lawyers battle allegations in week 1

By Staff reporters   January 16, 2018 | 07:00 pm GMT+7
PetroVietnam corruption trial: Defense lawyers battle allegations in week 1
Dinh La Thang, former politburo member and former Chairman of PetroVietnam at the trial. Photo by Vietnam News Agency

A summary of the main clashes between prosecutors and defendants at the trial of fallen political figures.

A week has passed since the start of the high profile trial of oil executives facing charges regarding million dollars losses incurred at a subsidiary of state-owned PetroVietnam (PVN).

The trial at Hanoi People’s Court, which is expected to last for another week, sees 22 former executives of the oil giant charged with embezzlement and economic mismanagement at PetroVietnam Construction Corporation (PVC).

The most prominent defendant, Dinh La Thang, former board chairman of PetroVietnam and once a rising political star, is facing 14-15 years in jail for “deliberately acting against State regulations on economic management, causing serious consequences.

Meanwhile, the notorious runaway Trinh Xuan Thanh, PVC’s former board chairman and general director, faces life imprisonment for the same charge plus embezzling property. 

The case as presented by prosecutors

Deliberate violation of state regulations

Under Thanh's leadership between 2008 and 2012, PVC undertook 12 construction projects which were financially problematic.

The company also invested VND3.4 trillion in 43 firms despite having charter capital of only VND2.5 trillion, resulting in financial difficulties.

To help PVC, Thang in January 2010 asked for the government's permission to let PVN appoint the contractor for Thai Binh 2 thermal power plant project. After obtaining the then prime minister's permission, Thang appointed PVC as the contractor but without evaluating its capacity or experience, making it illegal.

Thanh then had PVC quickly sign a contract with the project's investor PetroVietnam Power Corporation (PVPower), another subsidiary of PVN. This contract did not meet legal requirements, but Thang still instructed his subordinates to have PVN replace PVPower as the project's investor, then illegally paid PVC $6.6 million and VND1.3 trillion to work on the project in early 2011.

PVC executives used most of this money to pay off company debts and invest in other projects instead. When questioned by PVN executives in 2012, Thanh admitted to having used the money wrongfully and was instructed to retrieve it.

At the time of the police investigation in late 2017, PVC had only managed to retrieve VND1.09 trillion, while the remaining VND119 billion had been “lost”, according to prosecutors.

Embezzlement

Investigators found that Thanh and other PVC executives had embezzled money from the Vung Ang-Quang Trach project's management unit. Under Thanh's instructions, between September 2011 and February 2012, the project's director created documents for non-existent components of the project, then signed four contracts hiring a private firm to work on these ghost components for VND13 billion.

Out of this money, Thanh received VND4 billion to spend on Lunar New Year celebrations, while the rest was split between other PVC executives, heads of the project's management unit and the private firm involved in the scam.

The case as argued by defendants charged with violating state regulations

Whether violations were deliberate 

At the trial, Thang admitted to being “too impatient” and pushing so hard for the work to be completed on time that his subordinates had violated protocols. However, he has rejected the prosecutors' interpretation of the case.

According to Thang, his decision to assign PVC as the project's contractor followed the Party's policy of favoring Vietnamese over foreign project contractors, and was not a sign of favoritism toward PVC.

He has also denied having violated the law by specifically instructing his subordinates to give PVC money despite knowing the contract was not legal. Thang's lawyers have therefore asked the court to change his charge from "deliberately violating state regulations" to "negligence of responsibility".

However, prosecutors have proposed a 14-15 year sentence for Thang, claiming his refusal to admit to violating the law deserved strict punishment.

Throughout the first week, most other defendants charged with deliberately violating state regulations also claimed they were only following orders and were under great pressure from Thang.

Officials responsible for signing the EPC contract claimed they discovered and reported problems with it to their superiors, but were still told to sign it and then immediately transfer money from PVN to PVC.

The PVN and PVC executives responsible for making the decisions denied having received reports of problems with the contract and claimed they were therefore unaware it was illegal.

Prosecutors on Monday suggested a reduced sentence for six of the defendants.

PVC's suitability as contractor

The defendants' lawyers disputed accusations that PVN executives had assigned PVC as the project's contractor despite it lacking the necessary capacity and experience. One lawyer argued that PVC at the time was making a profit, and that it is still the contractor for the project, which is nearly 90 percent completed. Therefore, the prosecutors' claim that PVC was incapable of handling the project was unconvincing.

Size of losses

The lawyers disputed the method investigators had used to determine the loss caused by their clients. According to one lawyer, investigators had applied the civil code instead of the penal code when calculating the losses, resulting in a much larger figure due to a higher interest rate being applied. Prosecutors have dismissed this claim.

Additionally, while prosecutors claimed the defendants had misused VND1.12 trillion, causing a loss of VND119 billion, a representative from PVC at the trial claimed the company had already retrieved VND1.24 trillion as of September 2016. As this number exceeded the amount misused by the defendants, lawyers have requested that criminal charges against the defendants accused of violating state regulations be dropped.

The case as argued by defendants charged with embezzlement

Throughout the first week of the trial, Thanh consistently denied embezzling VND4 billion from the Vung Ang-Quang Trach project, but his subordinates quickly admitted to receiving money and claimed they spent it on the company's businesses instead of keeping it for themselves.

Countering the other defendants' and witnesses' testimonies against Thanh, his lawyers claimed they were inconsistent, contradictory and unreliable. Additionally, they claimed the evidence against Thanh were not sufficient and accused prosecutors of violating the principle of innocent until proven guilty.

Prosecutors have proposed a life sentence for Thanh, claiming his refusal to admit to the crime and his earlier attempt to evade arrest warranted strict punishment, despite him having returned some of the money.

The PetroVietnam trial opened on January 8 and is expected to last two weeks, taking place at the same time as a separate trial in Ho Chi Minh City where a $266 million fraud case involving Vietnam’s Construction Bank is being heard.

Vietnam’s energy and banking sectors have been at the center of a sweeping corruption crackdown spearheaded by Communist Party chief Nguyen Phu Trong. At a government meeting late last year, he said Vietnam's corruption crackdown is at an "all-time high".

 
 
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