Trillion-dollar super-profits

VietNamNet•26/06/2023

How is gold smuggled?

According to initial investigations, from 2022 to the present, the defendant Nguyen Thi Hoa (residing in Lao Bao town, Huong Hoa district, Quang Tri province) and the defendant Nguyen Thi Gai organized a smuggling ring that trafficked over 3 tons of gold, with a total value of approximately 5,000 billion VND.

Gold is being smuggled from Laos through the Lao Bao border gate (Quang Tri province) to be sold to domestic stores for illicit profit.

Phu Quy Gold Investment Joint Stock Company is considered a link in the smuggling ring. This company made dishonest declarations and reports on its 2021 tax settlement. Phu Quy committed tax evasion, causing damage to the State, initially estimated at 6.145 billion VND.

*The two defendants charged with tax evasion are Le Xuan Tung (left) and Le Thuy Quynh. (Photo: VOV)*

According to Tuoi Tre newspaper, this is an "internal" smuggling ring, as almost all those prosecuted are related to each other. The gold smuggling activities of this "family" had been going on for quite some time, but were only recently busted by authorities.

Gold smuggling is facilitated by Quang Tri province's geographical location bordering Laos, with numerous routes allowing easy crossing between the two countries.

The perpetrators hired people to transport and smuggle gold from Laos to Vietnam for sale, paying them based on the quantity of gold smuggled in. Once in Vietnam, the gold would be sold to various gold shops within the country.

How does Phu Quy Gold conduct its business?

Phu Quy Gold Investment Joint Stock Company was established in 2003 and is headquartered in Hanoi . Its main business activities are the production and distribution of gold, silver, jewelry, diamonds, and wedding rings.

Phu Quy Gold has been operating for over two decades and is one of the largest gold and silver businesses in Vietnam, with a presence in the biggest gold trading centers on Tran Nhan Tong Street (Hanoi) and Ham Nghi Street (Ho Chi Minh City).

*Smuggled gold enters Vietnam. (Photo: Public Security Newspaper)*

In addition to distributing and retailing SJC gold bars and 999.9 pure gold rings, Phu Quy also invests in and develops 24K gold art products, gold jewelry, diamonds, and wedding rings. Phu Quy also presents itself as a gold bar trading center licensed by the State Bank of Vietnam.

Furthermore, Phu Quy is also among the Top 500 largest enterprises in Vietnam. However, the company does not publicly disclose its revenue and profits.

The gold smuggling case involving 3 tons (approximately 5 trillion VND) is considered serious not only because of the tax revenue loss but also because it affects the economic management order, foreign trade management, and tax management of the State. Over the years, gold smuggling has been quite prevalent due to the difference between domestic and international gold prices.

Gold is not only smuggled from Laos but also arrives by air from several other countries, including South Korea, with the complicity of pilots and flight attendants from domestic airlines (as was the case in 2016).

At many times, the difference between world gold prices (converted at the bank's USD exchange rate) and domestic gold prices, ranging from 10-20 million VND/ounce, created lucrative opportunities and generated super profits for those involved in smuggling and importing gold.

Specifically, the world gold price at 9:00 AM on June 26th stood at $1,925 per ounce. Converted using the bank's USD exchange rate, world gold is priced at VND 55.4 million per tael (including taxes and fees), which is approximately VND 11.6 million per tael lower than the domestic gold price.

If the 3 tons of smuggled gold had been successfully sold in the domestic market, with a profit margin of 11 million VND per tael, the smugglers and those who legalized this smuggled gold could have reaped illicit profits amounting to thousands of billions of VND.

According to the World Gold Council, at many times, the value of gold bars imported into Vietnam was very high, exceeding the statistics of domestic agencies. There were years when the State Bank of Vietnam did not grant licenses to any company to import gold. Therefore, gold can enter Vietnam in two ways: firstly, through the State Bank of Vietnam allowing commercial banks to purchase foreign gold positions, and secondly, through smuggled gold bars.

The smuggling of gold into Vietnam can have many impacts, including effects on the exchange rate. While the demand for legitimate foreign currency has been relatively stable for many years, and foreign exchange reserves have increased significantly, the exchange rate still experiences occasional fluctuations.

According to the Ministry of Public Security, Le Xuan Tung, Chairman and General Director of Phu Quy Gold Investment Joint Stock Company, and Le Thuy Quynh have been charged with tax evasion, under Clause 3, Article 200 of the Penal Code.

Specifically, Le Xuan Tung is accused of tax evasion in a smuggling ring that brought 3 tons of gold from Laos to Vietnam. Phu Quy Gold Company made dishonest declarations and reports on its 2021 tax settlement, causing a loss to the State of more than 6.1 billion VND.

Nguyen Thi Hoa (Quang Tri) and Nguyen Thi Gai, along with 16 others, have been charged with smuggling, under Clause 4, Article 188 of the Penal Code. In addition, several other defendants were involved in this smuggling ring.

Currently, the Investigation Police Department of the Ministry of Public Security is consolidating documents and evidence to prove the criminal acts of the defendants who have been prosecuted and is expanding the investigation of the case; reviewing, seizing, and freezing the assets of the suspects to ensure recovery for the State.

Gold smuggling across the southwestern border is becoming increasingly complex.

Currently, gold smuggling is rampant in some southwestern border provinces, employing increasingly sophisticated methods, making prevention increasingly difficult.

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