Vietnam arrests head of shipbuilding group for alleged mismanagement

Aug 5, 2010, 5:02 GMT

Hanoi - Vietnamese authorities have arrested the head of one of the country's largest state-owned enterprises for alleged mismanagement that led the company to the brink of bankruptcy, officials and state media said Thursday.

The Investigative Police Agency arrested Pham Thanh Binh, 57, chairman of Vietnam Shipbuilding Industry Group (Vinashin), late Wednesday, police said.

Binh was accused of violating Article 165 of the Criminal Code, which prohibits 'deliberately acting against the State regulations on economic management, causing serious consequences.'

If charged and found guilty, he would face between 10 and 20 years in prison.

Vinashin got into financial trouble when it diversified outside its core business and the global recession hit its revenue, leaving it unable to keep up with its debt repayments.

In a move to rescue Vinashin from bankruptcy, the premier last month decided to restructure the company by moving some subsidiaries - and 20 trillion dong (1.05 trillion dollars) worth of debt - to other state enterprises.

Several prominent economists and experts have said the government's restructuring let one of the country's largest state-owned enterprises to the brink of bankruptcy.

Prominent lawyer Cu Huy Ha Vu, who sued Prime Minister Nguyen Tan Dung last year over bauxite-mining projects, called on the National Assembly to investigate the Vinashin case and bring charges against Dung for his role in its alleged mismanagement.

But Deputy Prime Minister Nguyen Sinh Hung said 'Vinashin is still within the government's capacity to solve.'

Hung said Binh should take responsibility for the company's performace and needed to be punished.

Meanwhile, the government wouldn't let Vinashin fail and 'would continue to issue bonds for Vinashin if necessary.'

Vinashin received a 750-million-dollar loan from the government in 2005, financed by an issue of international bonds. The move was widely criticized as unjustified state support of the company.