Vietnam jails former Vinashin executives after downfall
HANOI, March 30 |
HANOI, March 30 (Reuters) - A Vietnamese court jailed nine former executives of state-owned shipbuilder Vinashin on Friday for their role in the firm's downfall, which stoked investor concerns about weak corporate governance and indebtedness in Vietnam's state sector.
Former Vinashin chairman Pham Thanh Binh was jailed by the court in the port city of Haiphong for the maximum 20 years while the others received sentences of three-to-19 years for "intentionally violating state rules on economic management with serious consequences", said a journalist who was allowed to monitor the trial.
The court also ordered the defendants to pay "hundreds of billions of dong" in damages. ($1 = 20,780 dong)
Vinashin, or Vietnam Shipbuilding Industry Group, nearly collapsed in 2010 under almost $4.5 billion in debt in Vietnam's biggest state-owned company failure.
The ship maker had expanded rapidly into non-core businesses, like real estate and stock broking, and was hit by the global economic slowdown.
It had been one of a handful of industrial conglomerates championed by the government in an attempt to emulate South Korea's "chaebol" model and its downfall highlighted risks that contributed to the downgrading of Vietnam's debt ratings by all three major ratings agencies in 2010.
After revelations of its heavy debt burden were made public, Vinashin defaulted on a $600 million syndicated loan to foreign lenders in December 2010, when the first repayment of $60 million was due. U.S. hedge fund Elliott Advisers LP has filed a case against the conglomerate in the UK High Court.
The Vinashin debacle sparked debate in Vietnam and government officials have since pledged to restructure the economy and reform the large state sector.
Last week, Standard Chartered Bank announced that it had been retained by the Finance Ministry to advise the Vietnamese government on improving its sovereign credit rating.
But it remains to be seen how far the authorities will take the economic restructuring and state sector reforms.
"The government's reform strategy does not appear to give priority to tightening corporate governance or increasing transparency. The market also does not appear to be punishing Vietnam for Vinashin's default," said Jonathan Pincus, Dean of the Fulbright Economics Teaching Program in Ho Chi Minh City.
On Tuesday, Vincom Joint Stock Co, Vietnam's leading real estate developer, raised $185 million via five-year dollar bonds and plans to list them on the Singapore stock exchange. The convertible bond will carry an annual coupon of 5 percent.
Several other Vietnamese companies and banks have announced plans to tap international markets to borrow funds for expansion, including VietinBank, Vietnam's largest partly private lender by assets, which hopes to raise $2 billion.
Market players have questioned whether an international bond of that size for a Vietnamese bank is overly ambitious given global economic conditions. (Reporting by John Ruwitch and Ngo Thi Ngoc Chau; Editing by Nick Macfie)
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