HSBC and ANZ have named 13 companies of being involved in a series of frauds costing the banks VND300 billion ($13 million), leading to the prosecution of dozens of defendants and eight companies. While no wrong-doings have been identified on the part of the staff of the two banks, the court issued further investigation.
The Hanoi People’s Court has just held the hearing for the case of Bui Kien Dung and other defendants, working for 13 companies, who are accused of swindling and appropriating VND300 billion ($13 million) from HSBC and ANZ.
In the middle of 2014, HSBC and ANZ accused 13 companies of involvement in the fraud that appropriated VND300 billion ($13 million) from these two banks. The Ministry of Public Security’s investigation agency identified eight of these companies as related to the fraud.
According to the two banks, Medi-Sanfrontler Trade JSC, chaired by Bui Kien Dung, asked An Thi Huong Giang, former accountant of An Phat Investment JSC (also established by Dung) to forge documents to take up a bank loan at HSBC.
Thereby, Giang forged audit statements and copies of Medi-Sanfrontler’s 2009 and 2010 financial statements, falsely increasing the amount of receivables and inventory in the company’s loan profile. They gave the bank a number of fake contracts of purchase. When prosecution began, Medi-Sanfrontler owed HSBC VND55 billion ($2.4 million) in principal debt.
Until 2012, An Phat and Medi-Sanfrontler owed around VND150 billion ($6.5 million) to banks like HSBC, VIB, MBank, and VPBank. Then Dung and Giang negotiated with Vu Van Dien, former director of Toan Dien Co., Ltd. to borrow from HSBC and ANZ by using the legal entity of this company, while it still owed banks like Techcombank and Agribank. They forged documents to cheat bank staff, increasing Toan Dien Co., Ltd.’s principal debt to VND47.9 billion ($2 million) to HSBC and VND55.8 billion ($2.4 million) to ANZ.
This trick was used multiple times to take up a series of loans at the two banks. As of the time of prosecution, the total amount of debts in these two banks was VND379 billion ($16.5 million), including VND300 billion ($13 million) without collateral (VND201 billion – $8.7 million from HSBC and VND99 billion – $4.3 million from ANZ).
Among the 13 companies accused by these two banks, An Phat International Investment JSC, Vitaglobal Pharmaceutical JSC, and Trung Anh Pharmaceutical JSC paid off their debts and were not investigated. The investigation agency has not detected any violations at Thanh Cong Co., Ltd., while Tien Phat Co., Ltd. was detected to have forged documents and value-added invoices but the agency needs more time to build a case.
The investigation agency has also not found evidence of connivance by HSBC and ANZ staff who verified and approved the loan and disbursement documents. Additionally, HSBC and ANZ have not issued punishment to the involved employees. Many departments and officers of the banks took part in the loan approval procedures. Thereby, the investigation agency could not allocate individual responsibility in the case.
However, the Hanoi People’s Court has recently returned the documents and required additional investigation to clarify the responsibility of the banks’ officers.