Issuing corporate bonds and false business plans for real money from banks were the main illegal trading tactics of arrested banking mogul Nguyen Duc Kien, said a central police agency under the Ministry of Public Security.
By establishing three companies with functions and lines of business that are not related to financial investment, Kien has used the legal status of the companies to issue corporate bonds to some banks, said the Investigation Police Agency.
He then used this money to buy shares of many banks, and mortgaged the shares at those banks to take real money for debt repayment and personal expenditure, the agency said.
All of these actions are in contravention of regulations, it said.
But the names of those related banks have not yet been revealed.
As announced by the agency earlier, the arrest and prosecution of Nguyen Duc Kien is based on written complaints of law violations that occurred at the three companies, namely B&B Trade and Investment Joint Stock Co, ACB Hanoi Investment Joint Stock Co, and Asia Financial Investment Co Ltd.
Kien, who is chairman of the boards of management of all the three firms, may face a criminal trial under Article No.159 of the Penal Code, which refers to illegal trading activities.
The three Hanoi-based firms, which have a combined registered capital of VND2.3 trillion ($110.44 million), operate in civil engineering – housing construction, real estate, hotel-catering services, and trading.
False plans for real money
Although all three companies say they have no financial investment functions, Nguyen Duc Kien still used their legal entities to participate in the financial sector.
With huge amounts of capital and their reputation in the field of finance and banking, Kien has built up an image of economically powerful companies with high economic efficiency.
From there, he set up big business plans in order to improve the company’s asset values and create a strong financial reputation.
The police agency said they suspect these business plans are all unlikely plans which were drawn up to gain the trust of customers and banks so that Kien could use other people’s money in unauthorized financial investments.
After building the image and reputation for his companies, in 2008 and 2010, Kien issued corporate bonds many times and sold them to banks for hundreds of billions of dong.
Kien then delivered this money to his family members so that they could use it to buy shares of other banks.
After buying these shares, Kien used the shares as collateral for bank loans from where he had sold the bonds to get money for dividend and debt repayments, and personal purposes.
According to Tuoi Tre sources, B&B Trade and Investment Joint Stock Co and Asia Financial Investment Co Ltd own a 1.99 percent and 2.01 percent stake in the Vietnam Export-Import Commercial Joint Stock Bank (Eximbank – coded EIB).
Thus, with only a 0.21 percent EIB share under his name, Kien was not a major shareholder of Eximbank, as he claimed.
Dong Da District-based B&B Trade and Investment Joint Stock Co, which was licensed by the Hanoi Department of Planning and Investment on December 8, 2008, has a registered capital of VND1.5 trillion.
Its lines of business include conducting advertising and market research, trading jewelry (excluding gold import and the export of raw materials), building transport, civil and industrial infrastructure, and building logistics facilities.
The company has three founding shareholders, Nguyen Thuy Huong, Nguyen Duc Kien and Dang Ngoc Lan, of which Kien, the chairman of the board of directors, contributed VND990 billion (66 percent).
Hoan Kiem District-based Asia Financial Investment Co Ltd, with registered capital of VND500 billion, was founded on March 21, 2008 by Kien, who owned a 99 percent stake, and Nguyen Thuy Huong.
It had10 lines of business including offering hotel and restaurant services, building golf courses and offering golf services; building transport, civil and industrial infrastructure, managing of tangible and intangible assets of businesses, trading foreign exchange, import and export of gold jewelries, and buying and selling gold, silver and precious stones.
ACB Hanoi Investment Joint Stock Co, with registered capital of VND300 billion, was founded on November 10, 2006 by Nguyen Duc Kien, Huynh Van Son and Tran Ngoc Thanh.
Kien contributed a 70 percent stake, making himself the president of the board of directors.
It had eight business lines that were very similar to the aforementioned firms.
Source: Tuoi Tre Online