A court in Vietnam has handed tough jail sentences to nine former executives over their role in almost collapsing one of the country’s biggest state-owned companies.
Pham Thanh Binh, the former chairman of the Vietnam Shipbuilding Group (Vinashin), was sentenced to 20 years in prison on Friday, while eight other executives were jailed for terms ranging from three to 19 years for mismanaging state resources by a court in the northern port city of Haiphing, The Financial Times reports.
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In a bid to create state-owned national champions, Vietnam’s communist leadership established Vinashin in 1996, intending it to become on the world’s top shipbuilders, according to the BBC.
But the group almost collapsed in 2010 after racking up debts of some $4.5 billion following attempts to expand into a wide range of peripheral business areas, from tourist resorts and animal food production to motorcycle manufacturing and real estate.
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The nine defendants were convicted of being directly responsible for losses of $43 million, incurred through the purchase of ships without approval from Hanoi and two power plant projects that failed, according to BusinessWeek.
In his ruling, Judge Tran Van Nghiem said the officials’ actions had caused “serious economic consequences” and “reduced the people’s trust in the government.”
The Vinashin affair stoked concern among investors over weak corporate governance in Vietam and indebtness in its state sector, and resulted in agencies downgrading the country’s credit rating.
After revelations of its massive debts were revealed, Vinashin defaulted on a $600 million syndicated loan from a group of creditors led by Credit Suisse in December 2010, when a first repayment of $60 million was due, Reuters reports.
US hedge fund Elliot Advisers LP has filed a case against the group in the UK High Court.
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