Police arrested company chairman Ngo Van Huy, 39, vice chairman cum deputy general director Le Van Cuong, 37, and technical department head Nguyen Manh Ha, 32. Police are searching for the company’s general director, Nguyen Tuan Minh.

Established last year, the company set up a Muaban24 network with 120,000 online shops in more than 30 provinces and cities.

Muaban24 invited people to join its online market at the website www.muaban24.com at a cost of VND5.2 million (US$249) per person.

Each member was given a place to sell and buy goods at favourable prices.

Members earned VND1.5 million (US$72) for recruiting a new member to the market.

However, the website has never focused on trading and instead focused on expanding its customer networks. With the multi-level model, senior members were promised hundreds of million of Vietnam Dong (VND) in monthly income.

So far, the company has collected more than VND600 billion (US$28.8 million) invested by tens of thousands of members.

Police in the northern province of Hung Yen have prosecuted the provincial branch of the company.

Tran Huu Linh, director of the Ministry of Industry and Trade’s E-Commerce Department, said at a conference early this week that the ministry had refused license the company last August due to irregularities in company paperwork.

However, the company continued to operate illegally.

Linh said that a new e-commerce decree is needed to replace the 2006 one to stop this type of e-commerce operation.

He said the ministry is completing a draft decree and will submit it to the Government for approval.