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Wednesday, Sep 5, 2012 8:15 AM UTC

Vietnam nabs former boss at shipping company

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Topics: From the Wires,

HANOI, Vietnam (AP) — Vietnamese police have arrested the former chairman of a large state-owned shipping company for alleged economic crimes after he was extradited from a neighboring country, the government and state-run media said Wednesday.

Duong Chi Dung had been on the run since March, when authorities investigated the Vinalines company for corruption and arrested several of its executives.

Vietnam’s debt-ridden, corrupt and inefficient state-owned enterprises have been under scrutiny since ship building company Vinashin came close to collapse last year with debts of $4.5 billion. Nine of its executives were sentenced to long prison terms.

The communist government has vowed to reform the state-run sector, which by some accounts contributes up to 40 percent of the country’s gross domestic product, but doubts persist over whether it has the will or capability to do this. Many of the companies are run by ruling party officials or business people with close links to the state.

In March this year police arrested several Vinalines executives and accused them of mismanagement in the purchase of a floating dock that resulted in losses of about $5 million. Dung, whose house was searched by police at the time, has been wanted since then.

A short statement on the government’s website said Dung was arrested Tuesday by Vietnamese police. State-run media reported Dung was arrested in an unspecified Southeast Asian country — one report said Cambodia — and extradited to Vietnam. It was not immediately clear whether Dung had a lawyer.

In recent months, concerns about the bad debts owed by state-owned enterprises to Vietnam’s banks have spooked investors.

The banks themselves are widely believed to be under-reporting the extent of the money owed to them, adding to fears about the strength of the economy that has slowed significantly in the last 18 months.

In 2009 and 2010, state companies were given large loans to try and create jobs amid the global economic downturn, but the companies expanded outside their areas of expertise and speculated in property, the value of which has plummeted this year. Last month, authorities arrested two former executives from one of the country’s largest banks and accused them of economic crimes.

More Chris Brummitt.

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