Financial misdeeds uncovered at gov't investment arm

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State auditors have asked the State Capital Investment Corp. to identify those responsible for massive financial irregularities recently uncovered at the government investment arm, including millions in unreported funds.
The company (SCIC) will also have to clarify what role two vice general directors of the low cost carrier Jetstar Pacific, in which SCIC holds a nearly 70 percent stake, played in the loss of US$31 million related to its fuel hedging activities from July 2008 to May 2009.
According to an audit of SCIC's 2008 financial activities released on December 2, the company paid an average monthly salary of VND78.5 million ($4,300) to its general director Tran Van Ta, although it had reported a salary of only VND40 million in a business plan submitted to the government earlier.
The 2008 salary fund for the company's executives was more than VND2.6 billion, compared with the previously approved amount of VND1.473 billion.
SCIC also failed to outline its work requirements and salary structure as required by law, auditors said, adding that the company hadn't managed its revenue well.
Auditors also found the company's total assets valued at VND40,718 billion, exceeding its reported figures of VND39,801 billion by VND917 million.
Based on the findings, state auditors asked SCIC to officially change its 2008 revenue to the actual amount of VND72.6 billion while increasing the reported income it received on joint-stock company investments to the actual figure of VND31.1 billion and increasing its reported investments in other companies to the actual figure of VND45.1 billion.
They then asked SCIC to pay back taxes of VND25.2 billion for 2008.
The company will also have to include a VND1 trillion support fund for state enterprises that it runs and failed to mention in its 2008 financial report.
Incompetence and high salaries don't mix
SCIC manages a huge capital base of more than VND40.7 trillion ($2.2 billion) invested in more than 800 companies, but last year it had low returns on equity of only 12.4 percent, State Audit of Vietnam
Deputy General Director Le Minh Khai told a press briefing in Hanoi last week.
SCIC executives salaries were disproportionately high last year compared with most local people, said Dinh Trinh Hai, deputy head of the National Assembly Finance and Budget Committee, as quoted by Tuoi Tre newspaper.
Hai said the public needed an explanation.
"The question is how such high salaries were calculated and who got them."
The company had broken government-set limits on salaries at state-owned companies, he said.
"High bonuses and salaries are possible if a company makes huge profits, but they are not allowed to exceed the salary caps set by the government," said Hai.
Analysts said SCIC made low profits last year because it failed to manage its investments properly. Jetstar Pacific, for instance, posted cumulative losses of VND1.1 trillion ($59.6 million) at the end of last year.
However, the company managers still had "very high incomes, excessively higher than the company's performance," state auditors said.

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