Vietnam ship seized in Korea for return of $2.28 mln debt

Thanh Nien News

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Steel poles that Korean contractor SK E&C imported for the construction of a port in Khanh Hoa Province, but Vinalines pointed to its poor quality and refused to pay. Photo courtesy of Tuoi Tre

A bulk carrier from state-owned shipping giant Vinalines has been seized in Korea by its partner as leverage to claim a debt worth US$2.28 million.
The Seoul-based SK Engineering and Construction has seized the Vinalines Sky since the middle of last month after the Vietnam International Arbitration Center said Vinalines has to pay for the steel poles it imported to build an international transshipment port in central Vietnam.
Vinalines was thus asked to pay VND47.93 billion as it already paid VND87.61 billion in advance.
But the center’s ruling has since been suspended by the Hanoi People’s Court which received a Vinalines complaint last January, saying that it did not accept the quality and prices of the steel.
A source from Tuoi Tre said an estimated loss of some $400,000 has been incurred since the ship has not been in use.
Nguyen Truong Son, a former executive at Vinalines, said SK E&C is crossing the line.
Son said the Korean firm showed signs of commercial fraud as 544 steel poles did not look like new ones produced exclusively for the project. They were built in the wrong specifications and the company failed to produce their production documents, he said.
Son was director of a maritime project management board between 2007 and in 2010 was put in charge of Van Phong transshipment port in Khanh Hoa, construction of which was suspended last year after several delays since financially-strapped Vinalines did not have the wherewithal to continue.
He said that while the contract estimated the poles to cost VND52 billion, the contractor later valued the poles at VND115.5 billion.
Under Vietnamese laws, an investor only has to pay a contractor once work is finished and is of satisfactory quality, he said.
Nguyen Ngoc Quy, director of another maritime project management board at Vinalines, said based on checks and documents, only 224 poles could be paid for, and they were worth around VND41.5 billion, which is half of what SK E&C had received in advance.
In a report by SK E&C about reasons for delays of the port construction, it said Vinalines did not accept the poles as some were rusty.
Vinalines is already struggling with debts from subsidiaries transferred from the former shipbuilder Vinashin plus a loss of US$17 million embezzled by its executives in 2008.
The shipper reported $117 million in losses in 2012 and has yet to reveal last year's figure.

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