Government Inspectorate discovered a series of violations in bond issuance by many banks and companies.

(NLDO)- The Government Inspectorate has discovered a series of violations in bond issuance by 5 banks, 37 joint stock companies, and 25 LLCs.

The Government Inspectorate has just concluded on compliance with legal policies on issuing individual corporate bonds and using funds from individual corporate bonds (from January 1, 2015 to June 30, 2023).

The Government Inspectorate discovered a series of violations in the issuance of corporate bonds. Illustrative photo.

The inspection conclusion shows that 67 bond issuers were inspected, including 5 joint stock commercial banks, 37 joint stock companies, and 25 LLCs. Of these, 18 issuers belong to the Novaland Group, 6 issuers belong to Masan ...

From January 1, 2015 to June 30, 2023, 67 organizations issued a total of 827 corporate bond codes with a total value of more than VND 462,824 billion. Of which, the value of unsecured corporate bonds issued was VND 270,635 billion, equivalent to 58.4% of the total issuance value.

With 18 issuers belonging to Novaland Group and its subsidiaries, the inspectors determined that 131 corporate bond codes have been successfully issued. The codes have a term of 1-5 years, with a total value of 67,100 billion VND.

As of June 30, 2023, there are 59 corporate bond codes in circulation at 18 issuers with a total value of VND 34,835 billion. Of which, 2 issuers are overdue with both principal and interest on bonds, 4 organizations are overdue with interest. The total amount of overdue principal and interest is VND 5,528 billion.

According to the inspection conclusion, at Novaland Group, this unit issued and used 1,500 billion VND from corporate bonds to increase capital for its subsidiary, Khai Hung Real Estate Company Limited. Then, Khai Hung Company used it to receive the transfer of 99.9% of the capital (about 1,843 billion VND) of charter capital owned by Ms. Vo Thi Kim Khoa at The Century Hoang Kim Real Estate Company Limited.

However, through checking the cash flow at several banks, it was shown that Ms. Khoa's capital contribution at The Ky Hoang Kim Company did not exist in reality because most of it was transferred on the same day.

After Novaland Group transferred 1,500 billion VND from corporate bond funds to Khai Hung Company, the money was transferred through many intermediary companies. Finally, the destination was Nova House Trading Joint Stock Company for use.

The conclusion of the inspection agency clearly stated that Novaland Group and 3 other member companies, Unity, Aqua, and Lucky House, had committed violations in issuing corporate bonds. After receiving money from the bond source, the individuals transferred it to Nova House Trading Joint Stock Company for use, with a total of about 7,084 billion VND.

With 20 issuers belonging to the group of companies related to Novaland Group, from January 1, 2015 to June 30, 2023, 45 individual corporate bond codes were issued, with a total value of VND 27,350 billion. As of June 30, 2023, there are still 23 codes in circulation with a total value of VND 16,898 billion, of which 4 organizations have overdue debt of both principal and interest, 2 organizations owe interest. The total debt is VND 4,555 billion.

The inspection agency concluded that four companies related to Novaland Group had violated the law, namely Greenwich Company, BNP Global Company, Cat Lien Hoa Real Estate Development Company, and Residence Investment and Development Company.

Accordingly, Greenwich Company issued bonds and used 2,000 billion VND from corporate bond sources to cooperate with An Khang Company. By the end of June 2023, the bonds had overdue principal of more than 1,571 billion VND, overdue interest of more than 241 billion VND, but Greenwich had not yet paid the bondholders. At the time of inspection, there was still a risk of not being able to pay the principal and interest of the bonds, posing risks and causing losses to the bondholders.

BNP Global Company has issued bonds worth 2,100 billion VND and used the money to pay part of the value of the business cooperation contract for the Mui Yen project.

By the end of June 2023, the company owed overdue bond principal of more than VND 2,000 billion and overdue interest of more than VND 64 billion. BNP Global negotiated with bondholders to extend the debt but was not approved. By April 12, 2024, the company had paid all overdue interest and part of the principal of VND 833 billion. The remaining unpaid and overdue bond principal is VND 1,216 billion.

The Government Inspectorate stated that the company had violated its responsibility to fully and timely pay the principal and interest of bonds to investors. For now, BNP Global cannot fix the problem and arrange the funds to repay the debt to bondholders.

Cat Lien Hoa Real Estate Development Company has issued VND986 billion in corporate bonds, but has been slow in paying interest and principal. Residence Company has issued VND3,000 billion in corporate bonds to pay for the deposit to buy resort villas for Nova House Trading Company at the Nova World Phan Thiet project.

Transfer all information related to Nova Group to the Ministry of Public Security

Due to the limited scope of the inspection and the complex nature of the violations that could lead to great risks for bondholders and society, the Government Inspectorate said it has not conducted a specific inspection of Nova House Trading JSC because this enterprise is not subject to inspection.

However, in the face of serious signs of violations in the use of money raised from bonds, the Government Inspectorate has transferred all information related to Nova Group and four member companies (Khai Hung Real Estate Company Limited, Lucky House JSC, Aqua City Company Limited and Unity Real Estate Investment Company Limited), as well as violations showing signs of misuse of capital, to the Ministry of Public Security for consideration and handling according to its authority.

Source: https://nld.com.vn/thanh-tra-chinh-phu-phat-hien-loat-vi-pham-ve-phat-hanh-trai-phieu-cua-novaland-196251017200331063.htm