The Government Inspectorate has just announced the Inspection Conclusion on the implementation of restructuring, equitization, and divestment of State-owned enterprises under the Ministry of Construction.
In particular, the inspection conclusion pointed out a series of violations by Fico Corporation in financial handling and determining enterprise value for equitization.
Specifically, according to the minutes of the settlement of the value of the state capital at the time of official conversion into a joint stock company (June 30, 2016) of Fico Corporation, the difference between the value of the state capital at the time of official conversion into a joint stock company and the value of the state capital at the time of determining the enterprise value is 77.97 billion VND.
However, the corporation did not pay on time, resulting in late payment interest that must be recovered, tentatively calculated as of December 31, 2019 at VND 31.68 billion. The total principal and late payment interest that must be paid to the state budget as of December 31, 2019 is VND 109.65 billion.
The Government Inspectorate pointed out many violations in the equitization of Fico Corporation. (Illustration photo: Internet)
In addition, in case the privately owned part at New Generation apartment building (No. 17 Ho Hao Hon, Co Giang ward, District 1, Ho Chi Minh City) managed and used by Fico corporation is approved by the competent authority, the provisional amount of VND 8.34 billion must be recorded as an increase in the state capital of the enterprise at the time of equitization.
At Fico Corporation, the Ministry of Construction approved the enterprise value when handling the financial transfer to the joint stock company. The corporation recorded a shortfall in receivables from loan interest of VND 6.44 billion, reducing the enterprise value. According to regulations, this amount must be recorded as an increase in the value of state capital at Fico at the time of equitization.
In determining the enterprise value, the valuation of Tafico shares (a subsidiary of Fico Corporation) when issuing an increase in charter capital for existing shareholders at Tafico, determined by CPA Consulting Company VNC&V, was inaccurate and not in accordance with regulations. Specifically, the inventory was short of the value of capital in cash by VND 2.42 billion; 7 intangible fixed assets with an original value of VND 9.2 billion that are in normal use have not been evaluated; some payable debts have not been reconciled according to regulations of VND 612 million...
Inaccurately recording the inventory and assessment of the current status of some assets between the books and reality (sampling 20 types of assets, including: Low voltage power system and public lighting of the Employee Housing Area; Power station and 22KW power line; Drainage system from landmark 1 to the stream; Power supply system for the Water Treatment Plant; Communication system; Fico port green park area; cement silos 1, 2; rotary kiln; heat exchange tower; clinker silo)...
“ The organization of inventory, assessment of current status, and inaccurate valuation of assets as above affects the reduction of Tafico's enterprise value, affecting the determination of the starting price of shares to organize the auction of the right to purchase shares of Fico Corporation at Tafico ”, the inspection conclusion stated.
According to this conclusion, the Government Inspectorate discovered many violations in land management and use and finance of many "big guys" in the construction industry.
Specifically, regarding financial handling and determining enterprise value for equitization, the Government Inspectorate said that at some corporations, there are still many receivables and payables that have not been reconciled and confirmed, amounting to more than VND 5,690 billion.
Notably, some companies such as Song Da, Licogi, Fico, Lilama, Vietnam Water and Environment Investment Corporation (Viwaseen), VNCC had their enterprise values determined incompletely, inaccurately, and inconsistently, lacking deposit interest, brand value, depreciation of tools and equipment, and improper debt write-offs... with a total amount of 23.3 billion VND.
Enterprises such as Vietnam Cement Corporation (Vicem), Licogi Corporation (Licogi), Vietnam Water and Environment Investment Corporation (Viwaseen) when determining the enterprise value for equitization have calculated the value of commercial advantages and opportunity costs incompletely and inaccurately, with a total shortfall of about VND 1,879 billion.
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