Politburo asks Vinashin to restructure operations

Viet Nam Shipbuilding Industry Group had expanded too rapidly and scattered its investments in inefficient projects not related to its core operations, the Politburo said in a statement released yesterday.

The group (Vinashin) was on the verge of bankruptcy, with a debt of VND86 trillion (US$4.5 billion), 11 times higher than the owner’s equity, the Poliburo said.

Vinashin’s mismanagement had caused more than 70,000 employees to face a cut in salary and 22,000 to lose their jobs, it said.

The Poliburo blamed the group’s management board and directors and individually its chairman.

The capacity of management was below that required for such a large group and its subsidiaries and the leadership was irresponsible, unfaithful and intentionally violated State regulations and the Prime Minister’s rulings on investment projects,capital use and staff appointments, the Politburo said.

In a short time, the group had established many subsidiaries whose operations were beyond the group’s core business while being too slow to build a company charter and to introduce financial and construction investment management regulations and technical and economic standards.

Also up for critcism were Government advisory authorities, localities and central supervision agencies who, the Politburo said, had not played their full roles in managing and examining the group’s performance.

Despite many warnings from the public and mass media, the authorities and agencies had failed to discover the group’s serious shortcomings and faults from 2006-09 so they could be solved or prevented, the Politburo said.

Negative influences of the world financial crisis and economic recession on shipbuilding and sea transport had also contributed to the group’s poor performance.

And the fact the establishment of State-owned groups was still in a trial period had meant there was no foundation for working out regimes for their operation.

As a result, the Poliburo has asked the group to be restructured immediately to focus only on ship building and repairs and improving workers’ skills.

Subsidiary companies beyond the core business were to be equitised or sold and the funds used for core business and debt repayment.

Meanwhile, the Government was to work out feasible solutions to repaying debts in accordance with laws and international rules; to ensure the interests and safe operation of other groups, corporations and credit institutions; and to limit the negative impacts on employees.

Violating individuals would be investigated and punished in line with the law, the Politburo said, and a steering board led by Permanent Deputy Prime Minister Nguyen Sinh Hung would be set up to work out solutions and policies to stabilise and develop the group’s production and business.

Supervision activities on other State-owned groups and corporations would also be carried out. The group was set up in 1996 and grew at a rate of 35-40 per cent a year until 2006. — VNS

Tags: Vietnam shipping industry, Vinashin restructure