Vietnam metro suspends fat cat execs

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Directors of four state-owned companies cut legitimate benefits of workers and gave themselves highly inflated salaries

A flooded street in downtown Ho Chi Minh City. City authorities have suspended eight execs from four public service companies for accepting highly inflated salaries. Photo by Diep Duc Minh

Two top officials of the state-owned Ho Chi Minh City Urban Drainage Company were suspended on Wednesday (September 4), a day after several parts of the city were inundated by a heavy downpour.

But that was just a coincidence.

The officials were suspended for showering themselves with generous salaries and perks in blatant violation of state regulations.

Nguyen Trong Luyen, chairman of the public service company, and Le Thanh Son, the company's director, took home eye-popping pay packets last year.


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Son was paid VND2.6 billion (US$123,000) in 2012, forty times higher than his workers' average annual salary of VND65 million ($3,074).

Luyen, meanwhile, was paid VND1.6 billion ($75,664) last year. It is not clear why the chairman was paid less money than the director.

Vietnam's annual per capita income for 2012 was $1,555.

The city administration also suspended six executives of three other public services companies, including the chairmen and directors of the HCMC Public Lighting Company, the Sai Gon Traffic Works Company, and the HCMC Park and Green Trees Company.

All the eight officials were also suspended from Party posts for two months, and authorities pledged to figure out who was responsible for the erroneous payments.

The city's Party unit also required that the excess money the execs were paid be returned to the state budget.

The exposure sparked widespread outrage and condemnation of the officials.

According to a report by HCMC People's Committee, the payments violated Labor Code regulations.

The report said the leaders of these companies did not give full-time jobs to hundreds of eligible workers in order to avoid paying them higher salaries and perks, using the funds to enrich themselves instead.

It estimated that these actions have cost the state exchequer at least VND6 billion ($283,750) last year.

The exposure of these wrongdoings, discovered by municipal inspectors' office, had people remarking in newspapers and websites that it was unfair and immoral that leaders receive such high salaries while workers who have to work in difficult and dangerous conditions are paid poorly.

There were also comments that the four public service companies are not doing a very good job, given that even one heavy downpour inundates many areas, the streets are in a state of disrepair, and leaking electric wires kill people walking on the road or pavements.

Following the exposure, city authorities have ordered a large scale inspection of salary payments at all state-owned companies in the city.

The Department of Labor, War Invalids and Social Affairs has been asked to coordinate with other agencies to carry out the inspections and submit a report in November.

The Department of Finance will draft salary plans for key positions at these companies.

The Department of Interior will set up a disciplinary council to consider measures to be taken against the suspended executives.

At a meeting held August 29 to discuss the city's soci-economic situation, People's Committee chairman Le Hoang Quan criticized the "degraded ethics" of the eight executives.

"Your biggest crime is taking the salary of the workers to enrich yourselves. This crime should be handled firmly. It cannot be settled by just paying back the money taken," he said.

Quan mentioned that his own monthly salary, which is equal to that of a central government minister, is only VND11 million, including relevant allowances.

At a recent central government meeting, Minister of Government Office Vu Duc Dam had mentioned that the Prime Minister's monthly salary was just VND17 million, including allowances and deductions for social and health insurance.

Outdated regulations

Le Quyet Thang, director of the HCMC Urban Traffic Management Agency No. 1, said outdated regulations issued by the Ministry of Construction have aided misuse of funds by leaders of state-owned companies.

For example, the rules require paint maintenance work on road surfaces to be done far more frequently than is necessary now because modern paints are more durable, he said.

"The public service company can skip the maintenance work and take the cash," he said, adding that while modern technologies allow for less spending, regulations have not been modified accordingly.

Besides updating these regulations, the city should also hold public tenders for maintenance works to avoid misuse of state funds, he added.

In May, the State Audit Office reported that the salaries of many executives of state-owned companies in 2011 were "unreasonably high" and did not correspond to the companies' business performance or their workers' wages.

The Vietnam General Confederation of Labor proposed recently that the minimum wage be increased by 30 percent.

The minimum wage, used as a benchmark for deciding salaries and official bonuses for employees of government offices and state-owned agencies including the military, was raised to VND1.15 million from VND1.05 million a month in July.

A recent study by the confederation that interviewed 1,900 workers at 68 companies found that the average salary was still too low and barely enough to meet around 70 percent of "minimum living standards" for many workers.

The survey found 62 percent of the respondents had monthly salaries of under VND4 million and 5.2 percent were paid under VND2 million per month. It calculated spending on minimum living standards at VND1.928 million per month for single workers and VND3.278 million a month for one adult and one child.

"Many workers spend all their earnings to meet basic living costs and cannot save any money," it said.

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