Auditing state-owned enterprises: A series of 'big guys' with losses of tens of thousands of billions revealed

According to the audit results of state-owned enterprises, a series of "big guys" were named when they had losses of up to hundreds, even tens of thousands of billions of VND.

Many investments of corporations and general companies suffered heavy losses.

The State Audit has just reported to the National Assembly some major audit results in 2024. In particular, the audit results of state-owned enterprises show that all 9/9 groups and corporations inspected were profitable, with some units achieving a profit after tax on equity ratio of over 10%, even exceeding 20%.

However, the management and use of capital and assets of enterprises still have some limitations. Accordingly, most units still have errors in accounting, declaring obligations to the State budget, through auditing and adjusting assets, capital sources, revenue and expenses.

Some units have not yet established regulations for cash management and cash flow management is not effective. Debt management is not strict, there are still large overdue and bad debts, and low reconciliation rates. Meanwhile, advances have been pending for many years and have not been recovered; sales and deposits to suppliers without guarantees or collateral; provisions for bad debts are not made in accordance with regulations...

In addition, the debt-to-equity ratio is high; dividends have not been fully paid; charter capital has not been fully contributed or the owner's equity is larger than the charter capital but the capital increase plan has not been approved. Some units have even been put under special financial supervision.

Investing money in long-term joint ventures and associations, many corporations and general companies suffered losses.

The audit results also showed that some units' financial investment efficiency was not high, their production and business activities were ineffective and they were making losses.

Parent company - TKV: 4 investments in subsidiaries with accumulated losses as of December 31, 2023 are more than 412 billion VND (parent company's contributed capital is more than 1,759 billion VND).

TKV Minerals Corporation: 1 investment that does not preserve capital and 3 investments in subsidiaries that have not paid dividends because the profit after distribution is not enough to pay dividends or there is profit but there are still accumulated losses.

Parent company - HUD: Vietnam Urban Construction Investment Joint Stock Company has accumulated loss of 14.4 billion VND...

Many investments of corporations and general companies in joint ventures, associates and other long-term investments have suffered losses.

Specifically, the parent company - Vinapharm : Central Pharmaceutical Joint Stock Company 2 recorded an accumulated loss of more than 122 billion VND as of December 31, 2023, Davina Pharmaceutical Joint Stock Company lost 18.39 billion VND.

Parent company - HUD : Saigon - Rach Gia Joint Stock Company accumulated loss of nearly 124.5 billion VND, Bao Viet Hotel and Tourism Joint Stock Company lost more than 73 billion VND.

Parent company - Vinataba : 3/6 joint ventures and associates have accumulated losses of 225.6 billion VND and another long-term investment of 13.18 billion VND.

Sonadezi Corporation has Dong Nai Water Supply Joint Stock Company investing 50 billion VND in Gia Tan Water Supply Joint Stock Company (accounting for 10.47% of charter capital), must set aside a provision of 16.47 billion VND.

Parent company Vietnam National Coal - Mineral Industries Group (TKV) has an investment that must set aside 100% provision, equivalent to VND 55.87 billion.

Enterprises under the State Treasury and SCIC have huge losses.

In addition, the audit results of the Special Topic on the implementation of rights and responsibilities of the owner's representative according to the provisions of Decree No. 10/2019/ND-CP for the period 2022-2023 at the State Capital Management Committee at Enterprises (SCMC) showed that by August 2024, 3/19 enterprise restructuring projects for the period 2021-2025, 2/19 production, business and investment plans for the period 2021-2025 and 4/19 development strategies of enterprises had not been approved.

Up to 10/12 100% state-owned enterprises have not been evaluated and classified in 2023 and 1 enterprise has not been evaluated and classified in 2022; have not completed approval of equitization settlement according to regulations.

Notably, according to the 2023 financial statements of the units, the accumulated loss as of December 31, 2023 of Vietnam Coffee Corporation was 738.8 billion VND, Vietnam Electricity Group (EVN) had an accumulated loss of 50,611 billion VND, and Vietnam Chemical Group had an accumulated loss of 884.39 billion VND.

The results of the thematic audit at the State Capital Investment Corporation (SCIC) also showed that SCIC has divested capital from 37/77 enterprises with a total capital cost of VND 2,801/12,821 billion, equal to 21.8% of the 5-year plan in the period of 2021-2023. SCIC has sold all capital in 50 enterprises but has not yet recovered all dividends, the distributed profit is VND 23.8 billion.

In addition, the capital sale process also has cases where the value of land use rights to calculate the value of state capital is not determined in accordance with regulations or the consulting unit does not fully determine the value of state capital invested in the enterprise.

Some of SCIC's direct investments were also ineffective, with 3/14 enterprises having accumulated losses as of December 31, 2023 of VND 32,581.9 billion; 2/14 enterprises did not pay dividends or profits in the 2019-2023 period.

SCIC has not completed equitization at a number of units, nor has it fully received the rights to represent the state capital ownership at 5 enterprises handed over by the two ministries; it has not yet developed a plan and solutions to implement restructuring to improve management efficiency at a number of received enterprises.

As of December 31, 2023, SCIC has not yet approved the 5-year investment and development strategies and plans for the 2021-2025 period of 4/4 enterprises in which it holds 100% of the charter capital. The development of the charter capital increase plan submitted to the competent authority of SCIC is also not complete and clear; the capital representative is slow in preparing and submitting financial supervision reports.

“Some regulations related to the authority and responsibility of the State Audit Office of Vietnam and SCIC are not consistent, such as capital addition and divestment at subsidiaries and affiliated companies; state capital and corporate capital at enterprises transferred by SCIC,” the State Audit concluded.

The State Audit pointed out the ineffective investments of the Coal Group . The State Audit said that the parent company TKV still has a number of ineffective financial investments, posing potential financial risks.

Source: https://vietnamnet.vn/kiem-toan-doanh-nghiep-nha-nuoc-lo-dien-loat-ong-lon-thua-lo-chuc-nghin-ty-2423403.html