Six defendants charged with “deliberately violating the State’s regulations on economic management, causing serious consequences” at the Vietnam Social Security (VSS) and the Agribank Financial Leasing Company No. 2 (ALC II) were brought to court on September 18.

Le Bach Hong, former Deputy Minister of Labour, Invalids and Social Affairs
and former General Director of the Vietnam Social Security, at the trial
that began on September 18

The first-instance trial, scheduled to last for a week, is held by the People’s Court of Hanoi.

The defendants include Le Bach Hong (born in 1954, former Deputy Minister of Labour, Invalids and Social Affairs and former General Director of the VSS), Nguyen Huy Ban (born in 1948, former General Director of the VSS), and Nguyen Phuoc Tuong (born in 1951, former head of the planning-finance department – now the planning-investment department – and former chief accountant of the VSS),

Hoang Ha (born in 1976) and Tran Tien Vy (born in 1957), both former heads of the general planning division under the planning-finance department of the VSS, were also tried for the same charge as pursuant to Clause 3 of Article 165 of the 1999 Penal Code.

Meanwhile, Tran Thi Thanh Thuy (born in 1979), former specialist and former deputy head of the general planning division of the VSS’s planning-finance department, had to stand in the dock for “lacking responsibility, causing serious consequences” under Clause 2 of Article 285 of the 1999 Penal Code.

According to the indictment of the Supreme People’s Court, the VSS was allowed to use the temporarily idle money of the social insurance fund for development purposes. The social insurance fund’s investment activities must comply with the 2006 Social Insurance Law and other regulations.

Under Article 79 of the 2006 Social Insurance Law, which took effect on January 1, 2007 and other regulations, the VSS was only permitted to give loans to the Vietnam Development Bank, the Vietnam Bank for Social Policies and State-owned commercial banks.

Meanwhile, ALC II was a non-bank credit organisation. It was not permitted to borrow from the VSS, which in turn was also not permitted to provide loans for ALC II.

However, in February and March 2008, with a need for capital to fund business activities in finance leasing, then ALC II General Director Vu Quoc Hao met Nguyen Huy Ban and Nguyen Phuoc Tuong to ask for loans. The two sides agreed that to take loans from the VSS, ALC II must have the guarantee of Agribank (Vietnam Bank for Agriculture and Rural Development).

In March and April 2008, Hao signed two documents asking the Agribank General Director for the reception of VSS loans. Basing on ALC II’s request, then Agribank General Director Nguyen The Binh signed three payment guarantee letters for ALC II to take VSS loans.

From April 2008 to August 2009, VSS staff made 14 documents proposing Nguyen Huy Ban and Le Bach Hong lend ALC II money sourced from the social insurance fund. With the two’s approval, 14 contracts in which the VSS lent ALC II 1.01 trillion VND (43.6 million USD at current exchange rate) were implemented.

The Supreme People’s Court found that the loans had not been provided for appropriate borrowers and the lending had not complied with the investment principles of the social insurance fund, which ran counter to articles 96 and 97 of the 2006 Social Insurance Law.

On July 31, 2018, the People’s Court of Ho Chi Minh City declared the bankruptcy of ALC II. By that time, this company had just repaid one short-term contract while the 13 remainders were overdue with the total debt of more than 1.697 trillion VND, including over 769 billion VND in original loans and over 928 billion VND in interest.

ALC II was unable to repay the debts, causing total losses of over 1.697 trillion VND to the State.

Among the defendants, Le Bach Hong was charged with signing and directing the implementation of three loan contracts, causing losses of over 434 billion VND. Nguyen Huy Ban was charged with signing and directing the implementation of 11 contracts, leading to losses of over 1.263 trillion VND.