The Ministry of Public Security announced that the arrest of Nguyen Duc Kien, a major business mogul and investor, was related to his alleged wrongdoings at three companies where he served as a board chairman.
Kien was believed to be a major shareholder in several local banks. His arrest, on Monday night, caused a significant dip in bank stocks. The following day, five financial institutions announced that Kien's arrest would not affect on their operations.
On Tuesday, a release from the Ministry of Public Security announced that Kien, 48, is under investigation for "illegal business activities."
The charge relates to business activities that are not registered with the proper authorities. The crime could carry fines ranging between VND5-50 million and up to two years in prison, if he is found guilty.
The ministry said they were responding to complaints of wrongdoing at Kien's companies B&B Trade and Investment Joint Stock Company, ACB Hanoi Investment Joint Stock Company and Asia Hanoi Financial Investment Ltd., Co.
ACB Hanoi is a jewelry firm, B&B is a construction firm and Asia Hanoi is registered as a hospitality and golf course management firm, VnExpress reported.
Kien's arrest resulted in a stock market tumble and sparked concerns about the operations of several local banks, where he reportedly held shares--including ACB, where he once served as the vice chairman of the board.
"At the moment, Nguyen Duc Kien does not attend to the management of ACB (Asia Commercial Bank)," VnExpress quoted the release as saying. "The inspectorate's investiation only relates to violations at the companies where he acted as Chairman."
At a meeting with the National Assembly's Standing Committee that same day, State Bank of Vietnam Governor Nguyen Van Binh also stressed that the arrest would have no affect on ACB's operations.
"However, to maintain financial security, the state bank has pledged to support ACB's liquidity in the event of a massive run on the bank," Binh said.
According to the governor, Kien also served as the former vice chairman of ACB foundation board which was not regulated by laws regarding credit organizations.
In the meantime, representatives from ACB, Eximbank, Sacombank, Kien Long, and Phuong Nam (Southern Bank) made announcements that Kien either did not hold shares in their institutions or that his shares were so insignificant they would have no effect on their operations, VnExpress reported.
ACB Deputy Director General Nguyen Thanh Toai announced that since Kien withdrew from the bank's management board in 2010, he had gradually withdrawn his investment.
Meanwhile, Truong Van Phuoc, general director of Eximbank, told the news website that Kien held less than one percent of the bank's shares and did not sit on the bank's board.
Southern Bank, Kien Long, and Sacombank made similar statements.
Despite their efforts to distance themselves from Kien, stocks at Asia Commercial Bank (ACB), Eximbank (EIB), and Sacombank (STB) fell 6.95 pecent, 4.81 percent, and 4.82 percent respectively as the market closed on Tuesday, Giao duc Vietnam (Vietnam education) reported.
VN-Index was down by 4.67%, while HNX-Index fell by 5.24%, Dan Tri reported, adding that the market lost some VND35.6 trillion (US$1.7 billion).
Listed as one of Vietnam's 100 richest men in 2010, Kien also serves as vice chairman of The Viet Nam Professional Football Joint Stock Company, which runs the V-League.
Like us on Facebook and scroll down to share your comment