Former executive board chairman and general director of the Vietnam Shipbuilding Industry Group (Vinashin) Pham Thanh Binh was put into temporary detention on August 4 afternoon.

Former executive board chairman and general director of the Vietnam Shipbuilding Industry Group (Vinashin) Pham Thanh Binh was put into temporary detention on August 4 afternoon.

Binh, 57, was acused of intentionally violating State regulations on economic management, causing severe consequences, pursuing to Article 165 of the Penal Code. Police also search his house on the same day.

Vinashin, one of the largest State-owned economic groups, was recently found to be nearly bankrupt. It is now struggling with a debt of nearly $4.5 billion.

Speaking at a press conference on August 4 afternoon, Deputy PM Nguyen Sinh Hung confirmed that the government will strictly punish Vinashin officials who broke the law.

In January 1996, Binh was appointed General Director of the relatively small Vietnam Shipbuilding Industry Corporation. In 1998, he was named the company’s Chairman as well as General Director. In 2007, when a now much larger Vinashin was reorganized as a state-owned economic group, Binh retained both positions.

With such centralization of power, Binh made many decisions without consulting or informing most members of the Vinashin management board and his fellow general directors. For instance, Binh approved the purchase of a fast passenger & auto ferry, the Hoa Sen (Lotus) for 1.39 trillion dong (over $77 million) without the participation of a price assessment council. Only when the boat arrived in Vietnam, related ministries knew about it as Government Office Chair Pham Viet Muon admitted.

Binh intended to buy a second ferry and use both to provide 36 hour service between Ha Long, Hue city and Vung Tau. When the management board and general directors heard about the plan, they protested so fiercely that the contract was not signed.

According to Party Central Committee’s Commission for Inspection, Vinashin chairman Binh appointed his younger brother, brother-in-law and son to key positions at Vinashin without consulting the board of directors.

Binh’s son, Pham Binh Minh, held positions in several of Vinashin’s 200 subsidiaries. In 2007, when Minh was just 27, he was appointed as deputy head of the Shipbuilding Science and Technology Institute. Then last year Binh named his son to three other positions at once - chairman of the Industry Design and Consultancy Company, director of a laboratory, and deputy director of Dung Quat Shipbuilding Industry Company.

Binh appointed his brother Pham Thanh Phong as deputy director of a construction and investment firm owned by Vinashin and his brother-in-law as head of Vinashin’s foreign marketing department.

According to the inspection report, Binh deliberately violated state management regulations. He is said to have mismanaged public funds, driving the state-owned shipbuilder to insolvency and saddling it with an enormous debt of nearly $4.5 billion, while keeping the government in the dark by making false financial reports. Among the roughly 200 subsidiaries that Binh established were many that invested in non-core businesses like real estate, construction, tourism, and industrial parks.

After the Party Central Committee’s Commission for Inspection released its conclusion on Vinashin, Prime Minister Nguyen Tan Dung suspended Binh from Vinashin Chairmanship.

PV