Those who pay tens or hundreds of times higher than the starting price and then abandon their deposits need to be severely punished, according to National Assembly Deputies.
On the morning of November 28, the National Assembly discussed the draft Law amending and supplementing a number of articles of the Law on Property Auction. The content related to deposits and handling of abandoned deposits received much attention from delegates.
Ms. Phan Thi My Dung, Director of the Department of Justice of Long An province, mentioned many auctions in which participants showed unusual behavior, offering prices higher than the average, especially for public assets such as land use rights and mining rights. She said that there was an auction in which participants offered prices several tens of thousands of dollars higher, up to more than 200 times the starting price; or from a starting price of 24 billion VND, the winning price was up to nearly 1,700 billion VND, unusually high.
"Some organizations and individuals participated in the auction but abandoned their deposits, with the purpose of manipulating the market, not buying the property," she stated the reality.
Mr. Pham Van Hoa also mentioned the case of Tan Hoang Minh auctioning land lots in Thu Thiem or recent cases such as auctioning sand mining rights in Hanoi at high prices and then waiving deposits.
"There should be stronger sanctions for those who win the auction but abandon their deposit, such as administrative fines, increasing the deposit and banning these people from participating in future auctions for a period of time," a delegate from Dong Thap province suggested.
Mr. Nguyen Duy Thanh, Vice Chairman of the Ca Mau Province Business Association, spoke at the discussion session on the Law amending and supplementing a number of articles of the Law on Property Auction, on November 28. Photo: National Assembly Media
According to the draft law, auction participants must deposit 5-20% of the starting price of the auctioned property, which is equal to the current rate. This money will be converted into a deposit after winning the auction, but according to Mr. Nguyen Duy Thanh, Vice Chairman of the Ca Mau Province Business Association, in many cases the starting price is low, so the auction winner does not have to consider too much when giving up the deposit.
To limit the situation of winning the auction and then abandoning the deposit, Mr. Thanh said that it is necessary to separate the deposit and the deposit. In which, the deposit can be 20-30% of the winning auction price, and must be paid immediately after the auction result. If the winning bidder does not pay, the result will be canceled and the auction will continue.
"Supposing the deposit that must be paid immediately is up to hundreds or thousands of billions of dong instead of just a few hundred million or a few billion dong, the auction winner will certainly be very cautious when bidding," Mr. Thanh stated his opinion.
Citing international experience, the Vice President of the Ca Mau Province Business Association proposed adding specific regulations in the direction of criminal handling of acts of abandoning auction deposits, showing signs of manipulation, causing disorder, and negatively affecting economic security.
"The Penal Code needs to supplement corresponding acts in property auctions to avoid price inflation and dumping, causing serious consequences like in the recent past," Mr. Thanh suggested.
After the debate, Mr. Pham Van Thinh, Head of the Bac Giang Provincial Party Committee's Mass Mobilization Committee, said he disagreed because this was a civil relationship . "In all cases, the right to abandon the auctioned property of the winner must be respected and protected," he said. Instead, the bill could design an increase in the deposit to regulate this deposit abandonment behavior.
Mr. Thinh proposed that when auctioning in the form of continuous bidding in many rounds, when the price starts to increase twice the starting price, the deposit should be adjusted. This regulation applies to State assets put up for auction, and should not be adjusted for other assets. At the same time, the time for the winning bidder to pay the deposit should be shortened.
However, Ms. Phan Thi My Dung, Director of the Department of Justice of Long An province, said that the deposit of 5-20% of the starting auction price is reasonable and should not be increased. "Increasing this amount too high will affect the freedom of transactions, reduce competition and reduce the number of people participating in property auctions," she commented.
To resolve the problem of auction winners abandoning their deposits, Ms. Dung proposed that if after a certain period of time the auction winners do not fulfill their financial obligations and cannot prove the reason for force majeure, in addition to losing their deposit, they will also be subject to an administrative fine.
In response to the concerns of delegates about sanctions for those who abandon their deposits, Minister of Justice Le Thanh Long said that he would study, calculate, supplement and tighten regulations and sanctions when perfecting specialized laws. For example, adding administrative penalties and banning participation in auctions.
"Our view is that the stricter the law is, the better. The drafting committee will continue to research, especially considering whether to add any sanctions to limit and prevent this behavior," said Mr. Long.
However, the Minister of Justice added that to ensure the law is implemented in a reasonable and practical manner, many related factors are needed, such as business ethics and professional ethics.
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