Is it because of careless mistakes in writing the bidding price of shares or due to other reasons that the Petro Vietnam Financial Company (PVFC) was willing to lose earnings of VND1.2 billion? In return, other enterprises benefitted from buying shares VND4.5 billion lower than the winning bid price.
The event in question took place on January 18th 2005, when the Bao Viet Securities Company carried out an auction of the first shares of the number 3 Hanoi Construction Company at its headquarters. With the participation of 80 investors (13 of which were organisers) the auction was a success. The result was that the entire 940,600 shares were sold to one investor coded VP71 (the Petro Vietnam Financial Company) with the wining price of VND19, 800 per a share, the total amount estimated was VND18.6 billion.
Immediately after the auction, BVSC reported the result to investors and collected the bidding fee at the auction. However, two days later, BVSC received a document from the Petro-Vietnam Financial Company stating that it refused to buy all 940,000 shares resulting from the auction because it had been wrong to write too high a bidding price and it agreed to pay all compensation as well as the earnest money of over VND1.2 billion.
According to the Ministry of Finance’s Circular No 126/2004/TT-BTC, issued on December 24th 2004, about directions of the government’s decree No 187/2004 /NNÄ-CP describing regulations of selling first shares at auction, these refused 940,000 shares would be considered for investors who had the next lower price. However, the number of those investors would be considered mostly by ranking (67 individual investors), the next price was much lower than the winning price so the total received value (including bidding fee) would be over VND14.1 billion or VND4.5 billion lower than the winning value.
Public opinion has posed questions based on the event asking if there are any other reasons behind this simple explanation. Is it because of the difference of VND4.5 billion that the next lower tenders bought shares when PVFC refused.
According to Mr. Nguyen Quang Vinh – Manager of Bao Viet Securities Company, this is a unique case. In order to prevent the nation’s property and eliminate a collusion of tenders to take benefit, if there’s such a thing, Bao Viet Securities Company was required to send the document No 223/2006/BVSC-GD, dated February 7th, 2006 to Hanoi People’s Committee, Hanoi Management Committee of renewing and developing enterprises and Hanoi Department of Business Finance to ask for directions. He also said that the public auction should be held again because none of shares to be sold publicly had been bought up till now.
Thi Van
Vietnamese
