Sep 3, 2012

Vietnam - Mortgaged assets evaporate, banks weep bitterly

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VietNamNet Bridge – More and more consignments of goods mortgaged by businesses for loans suddenly disappear from the banks’ watch. As a result, banks get bogged down in unavoidable complications.

Lenders turn into victims

A lot of commercial banks have recently taken businesses to court, denouncing the businesses of swindling banks in the loans mortgaged by businesses’ products.

Some months ago, the An Khang Seafood Company in Can Tho City contacted banks to ask for loans, mortgaging frozen seafood products.

The problem was that the company only had 300 tons of frozen products, but it reported as having 1000 tons, which it mortgaged for the loans from five commercial banks.

Since the company could not pay debts, the five lenders sit together to discuss the sale of the seafood products to collect the debts worth 305 billion dong.

However, while the banks were still discussing, An Khang opened the storehouse for farmers to take the seafood products away. Since An Khang did not have money to pay farmers for fish, it had to pay farmers in processed products.

After the wrongdoing was discovered, the managers of An Khang have been prosecuted for swindling and appropriating assets.

Vietcombank Hai Phong now fears that it cannot collect debts from the Hai Phong Mechanical Engineering Trade Company, worth 46 billion dong by October 18, 2011. Meanwhile, the 4000 tons of steel products, which the company mortgaged for the loans, has disappeared.

Some shareholders of the company said that Pham Van Thuong, the company’s director has sold out the steel to get money to invest in other projects without informing about this to the bank.

However, VIetcombank Hai Phong was not the only lender. The Hai Phong Mechanical Engineering Trade Company still has not paid 39 billion dong in principal and 8.6 billion dong in interests to the Nam Dinh branch of PVFC, a finance company.

Vietcombank Hai Phong has raised a civil lawsuit to ask for the debt back instead of suing the company for swindling.

Especially, the Hai Phong-based Thai Son Industry and Trade company surprisingly could borrow 735 billion dong from 13 commercial banks with the same modest collateral.

On August 8, Pham Van Thu and his son, the chair and general director of the company were prosecuted for their behavior of swindling and appropriating assets.

In late 2010, Pham Hai Thanh, the son of Thu, borrowed 270 billion dong from Dong A Bank in HCM City to buy 12,000 tons of steel, with the consignment of steel used as the collaterals for the loan.

After that Thanh sold the consignment of steel to others companies, also owned by Thu and his son, then created forged documents with the steel products to borrow money from other banks.

As such, the consignments of steel mortgaged at 11 other banks, except Dong A, were just “virtual assets” created by the forged documents.

A creditor explained that the steel products have been sold to different companies which operated independently. Therefore, it was impossible for commercial banks to control the situation.

The story about businessmen’s morals

Nguyen Van Hoan, Deputy General Director of Ocean Bank, said that it is very risky for banks to provide loans accepting goods as the collaterals, and that banks would suffer heavily if they keep loosened management over the products.

Therefore, banks always have to ask staff to regularly examine the mortgaged assets at the storehouses of the borrowers and strictly check relating documents.

However, businesses can play a lot of tricks to swindle banks. Bank officers would feel secure, if they see the collaterals still at the storehouses. However, in fact, the products have been sold or mortgaged at other banks for new loans.

Nguyen Ha


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