Vietnam Party watchdog blames information ministers for $307 million loss in TV acquisition

By Bao Ha   June 2, 2018 | 11:09 pm GMT+7
Vietnam Party watchdog blames information ministers for $307 million loss in TV acquisition
State telco MobiFone said that it has been refunded in full by the private pay TV firm AVG after the deal between the companies fell through. Photo by VnExpress

Six senior officials ‘seriously violated the law’ in the state telco’s acquisition and should be punished, it said.

Current and former ministers of Information and Communications are responsible for "serious violations" in the acquisition of TV firm AVG by state-run telecom firm MobiFone, and should be duly punished, the nation’s top watchdog has said.

The two senior officials are among six officials identified by the Central Inspection Commission of the Communist Party of Vietnam in the deal that caused losses of over $307 million to the state.

The commission, which held a three day meeting in Hanoi that closed on May 30, pointed to former minister Nguyen Bac Son as the one who should take the primary responsibility for the deal.

MobiFone, the country's third largest telco, had made headlines since early 2016 when it announced it was breaking into the pay TV market with the acquisition of a 95 percent stake in Audio Visual Global JSC, better known as AVG.

But Son had let his ministry violate the Investment Law by approving MobiFone’s acquisition of AVG without the Prime Minister’s approval, the commission said.

The ministry approved the deal despite the fact that details of the price and the project’s investment efficiency had not been fully assessed, the Government Inspectorate had said in March.

The ministry reported to the PM and relevant agencies that 30 percent of funding for MobiFone’s acquisition of AVG was expected to come from the telco’s own equity, and the rest from loans.

However, funding for the project had not been clearly identified when the ministry approved the acquisition. In fact, 100 percent of funding for the acquisition came from MobiFone’s own equity.

The ministry had acted irresponsibly and approved the acquisition without a legal basis, violating the law and causing huge losses to the state, government inspectors said.

The deal was not a state secret, but the communications ministry asked the Ministry of Public Security to treat it as such, and also asked the latter for its input on the deal, which was not under its jurisdiction. This was another violation of the law, the inspectors said.

The Government Inspectorate concluded that the deal had violated investment laws and caused an estimated loss of about VND7 trillion ($307 million) to the state.

Now, the Central Inspection Commission has found that Truong Minh Tuan, the then deputy minister and current Information and Communications Minister, had signed the decision to approve the deal as also several other documents with content that did not adhere to the nation’s laws.

It also found Pham Hong Hai, current deputy minister of Information and Communications, showing a lack of responsibility in managing and inspecting the operations of MobiFone and signing several law-violating documents related to the acquisition.

Pham Dinh Trong, head of the ministry’s Department of Enterprise Management, also participated and contributed to making the deal happen, the commission said.

Le Nam Tra, chairman of MobiFone has to take full responsibility for the members’ council approving and executing the deal while Cao Duy Hai, general director of MobiFone, worked with the council on operating the project and signed many documents violating the law.

“The violations of the six officials are serious, causing huge losses for the state, affecting the operations and divestment of MobiFone, and therefore, they should receive proper punishment,” the commission said.

Early last month, MobiFone told authorities that it has been refunded in full by the private pay TV firm after the deal between the companies fell through.

The state-run telecommunications giant said that a total of VND8.9 trillion ($390 million), equivalent to a 95 percent stake in Audio Visual Global JSC. (AVG), had been returned to the company in April.

However, it has yet to return shares to AVG shareholders, and is waiting for confirmation from government inspectors before going ahead with the transfer.

 
 
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