Asked whether he discovered anything wrong in the signing of the EPC contract No. 33 of the Thai Binh 2 thermal power project, Thanh admitted that he had instructed Vu Duc Thuan (then PVC General Director) to sign the contract without reading its major contents carefully.
Thanh said official audit reports revealed that PVC still earned profits in 2011, but there were potential risk of losses and a big imbalance between the corporation’s charter capital and investments in other projects and subsidiaries.
He said PVC was one of the five spearheads of PetroVietnam (PVN) at that time, which was tasked with construction work on land. Therefore, while implementing the restructuring plan as assigned by the Government, PVN moved a number of its subsidiaries to PVC, forcing the corporation to borrow more money to invest in the companies.
|Trinh Xuan Thanh at the trial
Explaining why PVN appointed PVC as the main contractor, Thanh said the Bidding Law does not allow the appointment of a foreign company as the main constructor.
Thanh said only PVC has sufficient capacity to take the bidding package although there were problems with its financial capacity.
The defendant said that the Board of Director assigned Vu Duc Thuan (then PVC General Director) to prepare procedures and documents for the EPC contract No. 33. However, they did not have enough time to complete the documents, especially dossiers for bidding suggestion. Meanwhile, PVN leaders urged that the construction of the project must begin as scheduled and allowed the documents to be finalised later.
Thanh reported to the PVN leaders that the documents of the contract could only be completed by May at the fastest. However, under the pressure of PVN, he still instructed the implementation of the project.
Thanh admitted his responsibility for the lack of appendixes of the EPC contract No. 33, saying he just read the proposal document on the contract value without looking into its documents.
Questioned about the call for PVN’s payment of advance money, Thanh denied his involvement, saying that the PVC General Director was authorized to decide on the issue without having to report to or ask for approval of the Board of Directors.
Meanwhile, Pham Tien Dat (then chief accountant of PVC) said he reported the PVC’s capital imbalance and the use of advance payment for other purposes to Thanh and at meetings of the corporation. However, Thanh made no response at that time.
Nguyen Manh Tien (then PVC Deputy Director General) told the court that he signed documents asking for PVN’s capital advance under Thanh’s instructions and on the basis of the EPC contract No. 33. The advance money was spent at the instruction of the Board of Directors and the General Director.
He affirmed that the use of the advance capital must be approved by the Board of Directors.
At the court, Dinh La Thang, former Chairman of the Member Council of PVN, said the PVN’s appointment of PVC as the main contractor of the Thai Binh 2 thermal power project is in line with PVN’s strategy to develop into a big economic group operating in multi sectors, striving to increase the group’s turnover.
In February 2009, the Prime Minister agreed in principle that PVN can appoint its affiliates to implement projects. In that spirit, PVN set up a number of subsidiaries to do business in different sectors, with PVC hoped to become a strong construction unit of the group, Thang said.
He explained that as the Government urged the early implementation of the Thai Binh 2 project, the process could be sped up with a domestic contractor, because it would take time to find a contractor joint venture.
Given this, Thang said he had asked for the Government’s permission to appoint PVC as the main contractor.
Asked whether he checked PVC’s financial capacity before assigning it as the main contractor, Thang said all PVN’s departments affirmed that PVC had sufficient capacity in finance and construction.
He said despite the lack of several procedures, PVN still instructed the implementation of the Thai Binh 2 project to ensure its progress, as at that time PVN had many other projects.
The trial will run for two weeks.