Vietnam nabs former boss at shipping company

Sep 5, 2012, 10:18 AM

Associated Press

HANOI, Vietnam (AP) – Police have arrested the former chairman of an indebted Vietnamese state-owned shipping company for alleged economic crimes after he was extradited from a neighboring country, the government and state-run media said Wednesday.

Vietnam’s Communist leaders have vowed to reform the inefficient and corrupt state-owned sector, which economists say is a major impediment to continued growth and economic stability in the country of 87 million people. But doubts persist over whether the Communist party has the will or ability to trim the conglomerates _ which by some accounts make up more than 30 percent of the country’ gross domestic product _ given their close ties to party officials

Duong Chi Dung had been on the run since March when authorities investigated Vietnam National Shipping Lines or Vinalines for corruption and arrested several of its executives. Authorities searched Dung’s home at the time, but announced he had fled just before they arrived.

Alarms have being ringing over the health of state-owned enterprises in Vietnam since shipbuilding company Vinashin came close to collapse last year with debts of $4.5 billion after expanding into areas that included everything from animal food production to tourist resorts. Nine of its executives have since been sentenced to long prison terms.

In March this year police arrested several Vinalines executives and accused them of mismanagement in the purchase of a floating dock that resulted in losses of about $5 million. In May, government inspectors issued a report saying the company had five defaulted loans worth $1.1 billion and had bought 73 foreign vessels, many of which had run up millions of dollars in losses. Dung was reported to have risen through the ranks of the company despite years of poor performance.

A short statement on the government’s website said Dung was arrested Tuesday by Vietnamese police. State-run media reported Dung was arrested in an unspecified Southeast Asian country _ one report said Cambodia _ and extradited to Vietnam with the help of Interpol. It was not immediately clear whether Dung had a lawyer.

In recent months, concerns about the bad debts owed by state-owned enterprises to Vietnam’s banks have spooked investors.

The banks themselves are widely believed to be under-reporting the extent of the money owed to them, adding to fears about the strength of the economy that has slowed significantly in the last 18 months.

In 2009 and 2010, state companies were given large loans to try and create jobs amid the global economic downturn, but the companies expanded outside their areas of expertise and speculated in property, the value of which has plummeted this year. Last month, authorities arrested two former executives from one of the country’s largest banks and accused them of economic crimes.

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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Vietnam nabs former boss at shipping company