Doan Van Kien, chairman of the Vietnam National Coal - Mineral Industries Group (Vinacomin)

Years of irregularities appear to have caught up with the chairman of Vietnam’s major state-owned coal firm.

The party’s Inspection Commission censured Kien on August 28, who was also secretary of the Party Unit at the state-owned corporation, for ghastly mismanagement over the past several years.

According to the censure decision, Kien allowed the group’s affiliates to mine coal without licenses and signed contracts that allowed the Quang Ninh Industry Development Joint Stock Company to illegally exploit, process and sell millions of tons of coal.

Kien has also allowed another company to illegally mining coal at a Vinacomin mine and failed to cooperate with local authorities trying to curb illegal coal mining, the decision said.

In February, state auditors found several financial irregularities at Vinacomin dating back to 2007. The irregularities were traced to Kien’s mismanagement, Saigon Tiep Thi newspaper reported.

According to auditing results, parent company Vinacomin offered interest-free or low interest loans to affiliate companies, including joint-stock firms, causing losses in government revenue.

Auditors said Vinacomin had also offered loans worth a total of more than VND215 billion (US$12 million) by 2007 at 1.2 percent a year to affiliates for the purpose of buying cars, fixing roads, constructing meeting halls and hotels and other projects.

The loans caused losses of at least VND12.2 billion ($684,400) to the corporation compared to the state bank interest rates of 0.75 percent a month at that time.

Vinacomin had also offered interest-free loans of more than VND24.2 billion ($1.36 million) by the end of 2007, causing estimated losses of more than VND5.7 billion ($320,000), inspectors said.

Auditors said Vinacomin had failed to calculate its business results properly at the end of the year. They said the company had recorded smaller revenues by basing its figures on incorrect exchange rates while excluding 2007 dividends and interest from bank deposits.

The audit also found that Vinacomin had failed to collect large amounts of taxes from contractors, including VND27.7 billion ($1.5 million) from Chinese group SFECO and VND11.14 billion ($624,964) of Japanese company Marubeni.

Auditors said the amount of taxes Vinacomin collected on coal and water from some of the corporation’s affiliates should have been nearly VND65 billion ($3.6 million) higher.

The corporation had calculated coal export taxes based on domestic rates, auditors said.

The audit’s results also showed that Vinacomin had sold coal at prices lower than regulated to some local enterprises, including Lilama Corporation and the Cam Pha Cement Plant Project Management Unit.

Some buyers later resold the coal for profits, including the Quang Ninh Cement and Construction Company, which sold 3,760 tons of coal it had bought at low prices from Vinacomin to a pottery company in 2007 and 2008.

Source: Thanh Nien, Agencies