Hanoi Court Proposes Further Probe in TISCO Steel Project
TISCO Steel ProjectVietnam Investment Review

Hanoi Court Proposes Further Probe in TISCO Steel Project

VNA reported that the Hanoi People’s Court on April 20 recommended investigating possible violations of the Ministry of Industry and Trade and

VNA reported that the Hanoi People’s Court on April 20 recommended investigating possible violations of the Ministry of Industry and Trade and considering the launch of criminal proceedings against several officials of the ministry involved in a case related to wrongdoings at Thai Nguyen Iron and Steel JSC if sufficient ground is found. Specifically, the trial panel said the MoIT made some decisions against the law, introduced and chose incapable units to carry out section C of the engineering, procurement and construction contract No 01, which was one of the main factor leading to the consequences of the case. The panel also proposed clarifying the violations of the Vietnam Industrial Construction Corporation in the implementation of the section C.

According to the indictment issued by the Supreme People’s Procuracy, the VNS Board of Directors decided to invest in the second phase of TISCO’s production expansion project which initially had total investment of more than 3.8 trillion VND (USD 165). The China Metallurgical Group Corporation won the construction bid in 2007. The indictment said that although individuals at TISCO and VNS were aware that MCC had infringed the contract and groundlessly proposed the implementation extension and value hike, they did not consider contract termination, revocation of the advance, or reporting the matter to competent persons to abolish the bidding result and re-organise the bidding process so as to ensure the project’s effectiveness and progress. Among the defendants, Mung held the overall responsibility for the project’s effectiveness while Tinh was in charge of approving and directing project implementation.

Tran Trong Mung, former Director General of TISCO, was sentenced to nine years and six months in prison for violating regulations on management and use of State assets causing losses and wastefulness under Clause 3, Article 219 of the 2015 Penal Code. Thirteen other defendants were given jail terms ranging from two to eight years and six months on the same charge. Meanwhile, five defendants were imprisoned for 18 months to two years and two given suspended sentences of 18 months each on the charge of lacking responsibility causing serious consequences. The defendants were also ordered to pay compensation worth over 830 billion VND in total to TISCO.

On July 12, 2007, then TISCO General Director Tran Trong Mung and MCC General Director Shen Heting signed an engineering, procurement, and construction contract worth over USD 160 million. It was stipulated that the value, including taxes and expenses necessary for contract implementation, was to not change during the implementation process. TISCO and MCC launched implementation on September 29, 2007. However, more than 11 months after the contract took effect, MCC had failed to select or sign contracts with subcontractors, or carry out the EPC contract. Instead, it proposed extending the contract implementation duration and raising the contract value by more than USD 138 million.

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