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Vinashin former Chairman and General Director, Pham Thanh Binh. |
Tuoi Tre says the testimony of officials and a report to the Communist Party Central Committee report pin the blame squarely on mismanagement by its autocratic former Chairman and General Director, Pham Thanh Binh.
Vinashin’s internal organization and operating style were just “too special,” causing the shipbuilding conglomerate to go under, said a Vinashin officer.
In January 1996, the officer explained, Binh, then the vice director of the Institute for Transport Mechanical Engineering Design and Research, was appointed General Director of the relatively small Vietnam Shipbuilding Industry Corporation. In 1998, he was named the company’s Chairman as well as General Director.
In 2007, when a now much larger Vinashin was reorganized as a state-owned economic group (tập đoàn), Binh retained both positions. ‘It was suggested,’ the corporate officer told Tuoi Tre, that because the functions of a chairman and a general director are different, Binh should relinquish the job of General Director. Instead, Binh and others amended Vinashin’s charter to provide for up to six general directors.
This was a unique arrangement. None of the other seven corporate groups organized at that time had multiple general directors. And in fact, Binh remained on top. His peers held the jobs of General Director for Business, General Director of Internal Affairs, General Director for Investment, etc. De facto, they were deputy general directors and Binh was still the General Director.
With such centralization of power, Binh made many decisions without consulting or informing most members of the Vinashin management board and his fellow general directors. For instance, Binh approved the purchase of a fast passenger & auto ferry, the Hoa Sen (Lotus) for 1.39 trillion dong (over $77 million) without the participation of a price assessment council. Only when the boat arrived in Vietnam, related ministries knew about it as Government Office Chair Pham Viet Muon admitted.
Binh intended to buy a second ferry and use both to provide 36 hour service between Ha Long, Hue and Vung Tau. When the management board and general directors heard about the plan, they protested so fiercely that the contract was not signed.
Vinashin officials said that the centralization of power in the economic group allowed Binh to make a lot of bad decisions easily.
Nepotism
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A Vinashin motorbike and auto showroom in Hanoi. |
According to Party Central Committee’s Commission for Inspection, Vinashin ex-chairman Binh appointed his younger brother, brother-in-law and son to key positions at Vinashin without consulting the board of directors.
Binh’s son, Pham Binh Minh, held positions in several of Vinashin’s 200 subsidiaries. In 2007, when Minh was just 27, he was appointed as deputy head of the Shipbuilding Science and Technology Institute. Then last year Binh named his son to three other positions at once -- chairman of the Industry Design and Consultancy Company, director of a laboratory, and deputy director of Dung Quat Shipbuilding Industry Company.
Binh appointed his brother Pham Thanh Phong as deputy director of a construction and investment firm owned by Vinashin and his brother-in-law as head of Vinashin’s foreign marketing department.
Punishment deemed certain
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Vinashin Dung Quat Shipyard, which has been handed over to PetroVietnam. |
The report released by the Commission for Inspection on July 5 has clearly pointed out the wrongdoings committed by Binh and he will be severely punished, predicts a member of the National Assembly’s Law Committee, Vu Quang Hai.
It is up to the police to decide whether to undertake criminal proceedings, Hai added. What’s puzzling is how long it took the Government to uncover Binh’s wrongdoings. The deputy noted pointedly that for several years he and colleagues in the legislature have raised the issue of wrongdoings at Vinashin.
According to the inspection report, Binh deliberately violated state management regulations. He is said to have mismanaged public funds, driving the state-owned shipbuilder to insolvency and saddling it with an enormous debt of 90 trillion dong ($4.74 billion), while keeping the government in the dark by making false financial reports. Among the roughly 200 subsidiaries that Binh established were many that invested in non-core businesses like real estate, construction, tourism, and industrial parks.
The inspection report recommends that Binh be severely punished by the Party for flouting management norms and dereliction of duty.
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