HANOI, March 30 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
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
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