Greed costs private lenders millions of dollars in Hanoi

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At least four instances of people fleeing after borrowing several million dollars from those eager to earn skyhigh interest have come to light in Hanoi recently.


The latest case, in Phu Xuyen District, is said to involve nearly VND1,000 billion ($47.74 million).


But Le Hong Tuyen, a local official, said people and the lenders have exaggerated the amount of unpaid loans, which might be around VND300 billion ($14.32).


Most of the lenders to Nguyen Thi Cuc and her husband Hung are gold and real estate investors and pawnshop owners.


A lender was cited on a VTC News report as saying that he had borrowed money from his family and mortgaged his house's red book at a bank to lend the couple money in the hopes that could benefit from the high interest rates.


Hung and Cuc have been missing since October 5.


Another couple, Pham Thi Chinh and her husband Nguyen Ngoc Chuc in Cau Giay District, have also disappeared with their children the same night, with an unpaid debts estimated at around VND500 billion ($23.87 million), according to locals.


Chinh and Chuc had told people that they were opening a jewelry company that is a partner of many big gold shops in the city.


Local police have identified 12 lenders who had given Chinh more than VND25 billion in cash, 100 ounces of gold worth more than VND4 billion, more than US$150,000 and 6,000 euros.


But an investigation by Thanh Nien has found many others who have not reported their lending to the police, including one from Hoa Binh District who had lent Chinh two sacks of gold powder worth VND400 billion, and three in Tay Ho District whose combined lending reached VND210 billion.


The lenders were promised high interest rates.


"Some people were paid nine percent a month at the beginning, some even 15 percent," said a local woman named T., one of the lenders.


Chinh once gave a lender a diamond ring worth VND120 million after the latter loaned her VND30 billion, locals said.


T. said she and other lenders were surprised about the couple going bankrupt, as they were just going around in a new Camry car worth nearly VND2 billion, besides an Innova they already had.


Last month, two insolvencies in Ha Dong and Dan Phuong Districts also left many local lenders sleepless, news website VietNamNet reported.


On September 27, around 40 people in Ha Dong District sent a letter to local police, reporting that a woman named Nguyen Thi Dau had borrowed huge sums of money and was unable to return it.


Dau told the police that she had borrowed more than VND100 billion, 11 ounces of gold worth around VND500 million and $10,000 in cash.


But many gold shops in the area said that did not include several dozen billion dongs that they had lent to her.


Earlier on September 16, many people in Dan Phuong District also received the news that their debtors, Ta Viet Quang and his wife Bui Thi Quyen, had gone bankrupt.


Some people who had borrowed from banks to lend money to the couple had to sell their land and houses to clear their debts at the bank. Some even ran away, the news website reported.


Quang told local authorities that he first borrowed money from banks to invest in real estate but the market has been frozen recently, so he had to borrow quick loans from people to pay bank interest.


He owes more than VND211 billion ($10.07 million) besides the bank loans.


Dinh Van Toan, deputy director of Hanoi police, told Thanh Nien in a Thursday report that the police have noticed a number of potential bankruptcies among people who'd borrowed from banks and loan sharks to trade in gold but are making losses.


Toan referred to the informal loans among people as "black finance," saying that the borrowers usually posed as investors, or big business people and promised high interest rates in order to make others lend them huge sums of money. 

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