The central government has ordered officials in Ho Chi Minh City to quickly resolve the irregularities discovered during a recent inspection of the city’s multi-million dollar beltway project.

Prime Minister Nguyen Tan Dung has demanded a new look into the project costs and a prompt response to unresolved citizen complaints. 

The order came in response to the city’s objections to a highly critical government inspection of the project.

In his recent announcement, Dung reaffirmed the findings and called for quick action from the city in solving the irregularities and keeping the project on track.

The 13.7-kilometer beltway was designed in 1997 to connect Tan Son Nhat International Airport in Tan Binh District with Thu Duc through Go Vap and Binh Thanh.

South Korea’s GS Engineering and Construction Company was chosen to design, fund and build the VND8 trillion (US$383 million) roadway under a build-and-transfer contract.

Work began in June 2008. Soon after the groundbreaking, citizens displaced by the project submitted complaints to the municipal and central authorities, prompting a probe into the project’s finances.

GS was expected to complete the roadway by 2013, but city officials have argued that demands inspired by the government inspection may set the project back.

The inspection findings

In February, the Government Inspectorate issued a report criticizing HCMC authorities for changing the course of the proposed thoroughfare (based on a recommendation from GS) without obtaining approval from the Prime Minister or seeking feedback from the affected residents.

The inspectors stated that instead of widening Bach Dang Street, as planned, the city split 1.5 kilometers of the planned road into two narrower 20m-wide sections.

The unauthorized amendment sent one road through Gia Dinh Park and another through an old residential area.

The inspectors further charged that the city’s decision to build on more than 1.3 hectares of Gia Dinh Park without generating an environmental assessment report was illegal. They also claimed that the city had caused $44.3 million in losses to the state budget by low-balling the value on five plots of land, they added.

The plots were slated to be leased to the Korean firm in exchange for its investment.

Since then, the Government Inspectorate team has asked the HCMC People’s Committee, the municipal administration, to re-evaluate the value of the leased land and the beltway.

They have also instructed the city authorities to renegotiate aspects of the contract with the Korean firm.

The government inspectors charged that the city hall failed to monitor the quality and pace of the firm’s work, in accordance with the Prime Minister and the Ministry of Construction’s instructions.

The lack of oversight, they said, has slowed down progress on the roadway.

Moreover, inspectors found that the city "indirectly paid" GS VND138.4 billion ($6.62 million).

In their February findings, they alleged that neither the HCMC Department of Planning and Investment nor the project’s coordinating board could explain the suspicious transaction—a charge that the city has denied.

The city responds

On February 18, the HCMC People’s Committee issued a statement denying that they were responsible for a roughly $44 million loss of state funds.

Instead, the city authorities alleged that the inspectors had not given proper attention to their explanations.

In response to charges that they had "indirectly paid" VND138.4 billion ($6.62 million) to GS, city officials issued a written explanation, stating that the Korean firm was acting both as the investor and main contractor for the project.

The funds at issue were actually fees owed to the contractor, they said. The money included a reimbursement for airfare costs.

On the other hand, the HCMC People’s Committee has admitted that they erred in amending the plan approved in 1997 without obtaining permission from the Prime Minister. They said that the modifications were made in the interests of hastening the project’s completion.

Despite the denials, Prime Minister Nguyen Tan Dung recently issued a statement affirming the findings of the inspectors and has ordered the city to strictly address the alleged violations.

City officials have also been ordered to address complaints lodged by the affected residents and to submit a report on the matter, in May.

Following the release of the findings, the HCMC People’s Committee asked the Prime Minister to re-consider an order that called for a new appraisal of the value of the land plots and the beltway, fearing that it could cause a suspension of the project.

Regardless, the Prime Minister has instructed the Ministry of Natural Resources and Environment to reevaluate the project values by April 15.

His instructions specifically state that any new appraisal must not impede work on the beltway.