Agribank Financial Leasing Company No.2, a subsidiary of the state-owned Vietnam Bank for Agriculture and Rural Development, made a loss of VND3 trillion (US$143.3 million) in 2009, the State Audit of Vietnam has reported.

The amount represents more than eight times its chartered capital.

The SAV also detected a loss of around VND4.6 trillion last year from property leasing but did not release any information about it.

It said the 2009 losses were caused mostly by short-term loans given in 2008-09.

The inspectors have also reported various other violations by the company.

It accepted deposits of more than VND1.3 trillion at an interest rate of 17.5 percent, which is higher than its parent Agribank’s interest rate cap.

Its directors violated financial leasing regulations by allowing bad debtors to borrow further, the most flagrant instances being loans worth VND326 billion to five companies belonging to Le Xuan Ninh for buying 10 ships.

The company failed to check the quality of assets bought by its debtors.

Its office in Binh Duong Province bought a 250-ton crane for VND65 billion from a private company that had bought it just a week earlier for exactly half the price.

It paid VND71 billion for a stone grinder line worth VND7.1 billion.

The company also bought some properties from sellers who did not have the title to them — like the ship Dai Duong 12.

Agribank acted as the guarantor for it to borrow VND400 billion from Vietnam Social Insurance Fund to repay its loan to the bank.

It borrowed VND1 trillion from the Fund but by the end of 2009 was yet to repay its loans to Agribank.

When Agribank began to consider a restructure of its financial arm, total outstanding loan of the company has surged to VND4.58 trillion.

The SAV has pointed out that the responsibility lies squarely with AFLC2’s former CEO Vu Quoc Hao, its board of directors, and the CEO of Agribank.

In 2007 the Agribank chief had approved increasing the line of credit to AFLC2 to VND3.77 trillion at a time when it already owed the bank VND2.55 trillion.

The SAV said Agribank owes VND275 billion in taxes and fines for bad lending practices.

It has recommended to the government to begin investigations to recover the loss to the exchequer.

Agribank is the biggest bank in Vietnam in terms of assets, number of employees, branches, and customer base.

It received a capital injection of VND10.2 trillion ($536.84 million) from the Government in March last year to raise its chartered capital to VND21 trillion.

As of December 2009 it had assets of VND 470 trillion, and outstanding loans of VND 354.112 trillion.

Source: Tuoi Tre