Ho Chi Minh City is likely to lose hundreds of billions of capital in the project of planting 10,000 hectares of rubber in Laos.

Rubber trees die en masse for unknown reasons

The Ho Chi Minh City Inspectorate has just announced the conclusion of the inspection on compliance with legal regulations in capital contribution to Ho Chi Minh City Rubber Joint Stock Company (Ho Chi Minh City Rubber Company) and implementation of rubber planting project in Laos by shareholders under the City People's Committee.

Ho Chi Minh City Rubber Company was established from the policy of implementing an investment project to plant 10,000 hectares of rubber in Laos. The project's goal is to invest, plant and process rubber latex to help Laos develop its socio -economy, strengthen the Vietnam - Laos friendship, and create jobs for workers of both countries.

At the time of inspection, the project still had nearly 1,036 hectares of rubber being cared for and exploited. Of the 2,838 hectares of rubber planted, 1,803 hectares of rubber growing poorly, not being cared for, and being liquidated. The total investment capital for this rubber area was nearly 137 billion VND.

Of the VND137 billion invested, 5 state shareholders under the Ho Chi Minh City People's Committee account for 72.13% and are likely to lose capital. These 5 shareholders include: City Youth Volunteer Force; State Financial Investment Company; City Dairy Cow Company Limited; Saigon Tourist Corporation - LLC and Saigon Trading Corporation - LLC.

Five shareholders of the Ho Chi Minh City People's Committee are likely to lose capital in the 10,000-hectare rubber plantation project in Laos. (Illustration photo)

The Ho Chi Minh City Inspectorate determined that the Ho Chi Minh City Rubber Company had many shortcomings such as: Not changing the charter capital according to the actual capital contribution of shareholders; not following bidding regulations for packages to purchase seedlings, fertilizers, and pesticides; poor care leading to the death of 704,420 seedlings.

Immediately after planting, the trees grew poorly, many died, and had to be replanted at a rate of up to 70%. However, Ho Chi Minh City Rubber Company continued to plant massively without checking, researching, and determining the cause for adjustment.

Since then, Ho Chi Minh City Rubber Company has liquidated rubber trees four times in 2012, 2013, 2016 and 2017, causing losses of 137 billion VND on its investment capital. To date, the company has not worked with relevant units to determine the cause of the mass tree deaths.

Regarding the management of rubber planting and care, and nursery care, Ho Chi Minh City Rubber Company assigned the team leaders and deputy team leaders to hire workers to do it. However, the company could not provide documents to prove that they planted and cared for rubber trees. Some payment documents were invalid.

According to the Ho Chi Minh City Inspectorate, an inspection of the current status of the project showed that over 111 hectares of the project had no rubber but only forest trees such as rosewood, red ironwood, and ox-hooves, etc. Some areas that had been cleared did not have rubber tree stumps, so there was no basis to determine whether rubber was planted or not.

Transfer capital to subsidiary in Laos

In the above mentioned 10,000ha rubber planting project in Laos, the Ho Chi Minh City Inspectorate determined that Ho Chi Minh City Rubber Company had procedural and financial violations.

Regarding procedures, Ho Chi Minh City Rubber Company invested 61 billion VND to plant rubber on an area of 785 hectares without being allocated land by the competent authority of Laos or signing a land lease contract.

The company spent 1.5 billion VND to survey 2,100 hectares of land in Attapeu province, but for many years has not been able to proceed with the next steps. Currently, the Attapeu provincial government has assigned the land area that the company surveyed to another unit for use.

Regarding finance, Ho Chi Minh City Rubber Company recorded deposits into financial revenue accounts and long-term prepaid expenses in violation of regulations.

In addition, the company also transferred capital to its subsidiary in Laos in the form of cash, with the amount of cash brought through the border gate each time being greater than the regulations. This transfer of investment capital abroad is against the regulations.

When reclaiming 3,045 hectares in Champasak province, the company did not clearly record the volume of wood and the amount of money earned from the exploited wood.

According to the Ho Chi Minh City Inspectorate, 5 shareholders under the Ho Chi Minh City People's Committee did not ensure the progress of capital contribution, failed to supervise the activities of the Ho Chi Minh City Rubber Company, and failed to promptly report and ask for direction from the City Party Committee and People's Committee.

Based on the inspection conclusion, the Chairman of the Ho Chi Minh City People's Committee agreed and directed the Director of Ho Chi Minh City Rubber Company to correct the errors. At the same time, organize a review, clarify responsibilities and handle organizations and individuals according to authority.

Regarding the transfer of capital by Ho Chi Minh City Rubber Company to its subsidiary in Laos and the determination of the volume of wood the company obtained during the forest reclamation process, the Ho Chi Minh City Department of Planning and Investment was assigned to coordinate with competent authorities to review.

In case of detecting signs of law violations, causing damage to State shareholders, report to Ho Chi Minh City People's Committee for consideration and transfer the file to the competent authority for handling.

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