Vietnam - State-owned firm loses in non-core businesses

An inspection conducted by the Ministry of Finance has found the state-owned Saigon Trading Group, or SATRA, neglecting its core business to operate in non-core ones, making massive losses.

The inspectors said SATRA’s investment in its main business of food manufacturing and distribution only accounted for 43.11 percent while the minimum required rate was 70 percent.

It had invested the rest in securities, banking, insurance, and investment funds, according to Nguoi Lao Dong newspaper.

By the end of the first quarter, SATRA had sunk more than VND546.4 billion (US$26.2 million) in these sectors.

The company had sunk over VND490 billion in six banks though state-run enterprises are only allowed to invest in one firm in a particular sector.

These investments bore SATRA bitter fruits.

In 2008 it contracted with Thanh Viet Fund Management Co to buy 481,095 shares of Vietcombank at VND103,000 each.

Though it paid the fund VND49.5 billion, it only got 266,095 stocks worth VND27.4 billion.

Besides losing the remaining VND22.1 billion, SATRA also lost heavily on the investment since the Vietcombank share now trades at a mere VND20,000.

SATRA has filed a suit against Thanh Viet Co but the case is still in court.

In 2010 the company lost VND89 billion in a dispute over a wheat trading contract with Thai Nguyen 1 Co Ltd.

A state enterprise with a large registered capital of VND3.6 trillion, SATRA also signed up for Ho Chi Minh City’s price stabilization program.

It was allowed to borrow VND11.3 billion without interest for 10 months, and in return sell 1,700 tons of white rice a month at 10 percent lower than market price.

Under the program, SATRA was required to sell the rice lower than market rice directly to customers.

SATRA registered with the city Department of Finance to sell the rice at VND8,500 a kilogram at its 66 outlets citywide.

But between October 2010 and March 2011 it sold only 100 tons a month, and not to individual consumers as required but to wholesalers.

In 2008 the city people’s committee and the Ministry of Finance gave approval for SATRA to issue bonds worth VND1 trillion to raise funds for some major projects.

But the company deposited a part of the money in banks.

TUOITRENEWS

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