Vietnam Engine And Agricultural Machinery Corporation (VEAM) is considered a ‘big fish’ of the industry and trade sector. Some businesspeople said they envy VEAM as the enterprise still can earn big money even if it sits idle.

However, bad news has come recently to the enterprise.

On June 11, VEAM officially announced that CEO Phan Pham Ha has been arrested on the charge of abusing his position and power while performing official duties. The machinery manufacturer on the same day announced the dismissal of the CEO and the chief accountant.

Ha took office as VEAM’s CEO in November 2019, when the Ministry of Industry and Trade (MOIT) released a document on electing Ha as the representative of the state capital at VEAM.

On June 24, 2022, VEAM’s board of directors approved a decision on re-appointing Ha to the post of CEO.

Before becoming VEAM’s CEO, Ha acted as the representative of the state capital, member of the board of director at the Machines and Industrial Equipment (MIE) under MOIT, and CEO of the Hanoi Mechanical Company Ltd Vietnam (Hameco), which was a subsidiary of MIE.

Ha is the latest manager of the corporation arrested by the Ministry of Public Security (CO3).

Prior to that, on August 3, 2019, the ministry released a decision to take criminal proceedings for violating regulations on management and use of state assets, causing loss and wastefulness at VEAM. 

The investigation agency also issued a warrant to arrest Tran Ngoc Ha, former chair of the board of directors, former CEO; and Lam Chi Quang, former CEO, and a number of other leaders and former leaders.

VEAM profits

VEAM reports high profits every year. However, analysts point out that its major source of income is joint ventures with foreign partners. And production and business performance results of its subsidiaries are bad.

Many years ago, VEAM teamed up with foreign partners to set up joint ventures, contributing capital with land use rights. It holds 20 percent of charter capital in Honda Vietnam, 30 percent in Toyota Vietnam and 25 percent in Ford Vietnam. 

All the joint ventures have been performing well, bringing high profits to VEAM. That is why analysts say that VEAM’s performance has been relying on car and motorbike manufacturing joint ventures.

A report found that as of the end of 2023, VEAM’s stockholder equity had reached VND4.28 trillion in Honda Vietnam, and VND545 billion in Toyota Vietnam and VND374 billion in Ford Vietnam.

VEAM received VND5.844 trillion in dividends from Honda Vietnam in 2023, VND660 billion from Toyota and VND303 billion from Ford Vietnam.

The total dividends VEAM received from the three joint ventures was VND6.807 trillion, higher than the VND5.326 trillion in 2022.

MOIT is now the biggest shareholder in VEAM, holding 1.175 billion VEAM shares (VEA), or 88.47 percent of the corporation’s charter capital. MOIT, as the state shareholder, received VND4.9 trillion in profits in 2023, mostly from these joint ventures.

In the last five years, VEAM has paid high dividends (over 40 percent) in cash. The figures were over 50 percent in 2019 and 2020.

VEAM has publicized the documents for the 2024 annual shareholders’ meeting, expected to take place on June 20.

The corporation plans to obtain turnover of VND6.413 trillion in 2024, or 22 percent lower than the last year, and a post-tax profit of VND5.488 trillion, or 19 percent lower.

VEAM commented that the engine and agricultural machinery sector has witnessed continued decline in recent years, while there is still no good news about automobile manufacturing. VEAM’s automobile manufacturing factory (VM) still cannot sell its inventory.

VEA closing price on June 11 increased by VND200 per share to VND47,500.

In 2022, Tran Ngoc Ha, VEAM’s former chair and CEO, received an 11-year jail sentence; and Lam Chi Quang 8 years.

In 2023, Pham Vu Hai, former deputy CEO; Nguyen Duc Toan, former deputy CEO of VM; and Tran Ngoc Ha, VEAM’s former chair and CEO were in court for violating regulations on the management and use of state’s assets.

In 2023, Nguyen Thanh Giang, VEAM’s former CEO, and Lam Chi Quang, former chair were sentenced to 5 years in prison.

Luong Bang