Investigation Underway for MobiFone’s Privatization Project

Vietnam’s Party General Secretary and President Nguyen Phu Trong has began a full-blown investigation into the privatization project of the state-owned mobile career MobiFone, in which former Prime Minister Nguyen Tan Dung was believed to be deeply involved.

The Inspection Commission of the Party Central Committee held from November 12 to 14 decided to reprimand former Vice Chairman of the Government Office Le Manh Ha, and Deputy Minister of Finance Tran Van Hieu, both of whom were engaged in MobiFone’s illegal acquisition of pay-TV company, AVG. The Commission also asked the Party Central Committee’s Secretariat to consider punishing Bui Quang Vinh, former Minister of Planning and Investment.

MobiFone announced to acquire 95% share of AVG by paying VND 8.89 trillion (USD 380 million) January 2016, however, the deal was called off last March, as the Government Inspectorate concluded that the unreasonably expensive sales price of unprofitably operated AVG caused the State budget loss of USD 300 million.

Four people including MobiFone’s top official have been arrested in relation to the illegal acquisition of AVG.  Then-Minister and one of his Deputy Ministers of Information-Communication were disciplined also.

According to the Government Inspectorate, Ministry of Planning and Investment violated the Investment Law by proposing then Prime Minister Dung to approve in-principal the acquisition of AVG in November 2015. The Ministry, however, in reversal suggested terminating the contract in January 2016, claiming significant risks in the deal for MobiFone in preparation for IPO.

Furthermore, the Ministry of Finance did not make a proper evaluation on the acquisition’s potential financial effects on MobiFone. In addition, the Prime Minister’s Office instructed the two Ministries to evaluate the deal without sufficient information and requested Mr. Dung to approve the deal in-principle.

The IPO advisory of Mobifone is VietCapital Securities, which was founded and is chaired by Ms. Nguyen Thanh Phuong, daughter of Mr. Dung. VietCapital Securities was reportedly  involved in the acquisition of AVG as well.

Ahead of the Inspection Commission’s meeting, the Party’s Central Steering Committee for Anti-corruption chaired by General Secretary Trong instructed relevant agencies to speed up the procedure of prosecution and judgment on the cases including AVG’s acquisition on November 10. The scope of investigation could be expanded as the procedure moves on.

(Akihide Mori, Vietnam watcher)