Illegal bidding scheme at the heart of the scandal

According to investigators, Nguyen Van Hau, Chairman of Phuc Son Group, devised an elaborate scheme to secure high-value construction contracts through fraudulent means, causing state losses exceeding 289 billion VND ($11.3 million).

The investigation report states that in early 2010, Hau approached Bui Minh Hong, then Chairman of the Vinh Tuong District People’s Committee, to gain access to discussions regarding the Red River Dyke Project. Originally planned as a publicly tendered project with stringent qualification requirements, Phuc Son Group lacked the expertise and financial capacity to win the bid through standard procedures.

To circumvent these obstacles, Hau sought assistance from Pham Van Vong, former Secretary of the Vinh Phuc Provincial Party Committee, and Phung Quang Hung, former Chairman of the Vinh Phuc People’s Committee. With their backing, Phuc Son Group was allowed to participate through direct contract awards instead of competitive bidding.

Subsequently, the former Vinh Tuong District Chairman submitted a proposal to the provincial government advocating for direct contract awards. Based on this request, Ha Hoa Binh, then Vice Chairman of the Vinh Phuc People’s Committee, endorsed the change, which was later approved by the Prime Minister under the condition that the direct contracting complied with legal regulations.

Manipulating the tendering process

Following the Prime Minister’s approval, former Chairman Phung Quang Hung instructed the provincial office to issue documents asserting that the project was urgent and required direct contract awards. Vinh Tuong District officials then falsified reports, exaggerating the dyke’s deterioration to justify bypassing public bidding procedures.

Additionally, Bui Minh Hong ordered the district’s Project Management Board to leak detailed bidding information to Phuc Son Group, allowing the company to prepare its application in advance.

Investigators allege that Hau instructed subordinates to fabricate financial reports, inflate revenue figures, and collude with auditing firms - including APEC Audit Company, Indochina Audit Company, and Van An Audit Company - to falsify financial statements, making Phuc Son appear qualified for direct contract awards.

With inside information in hand, Phuc Son Group submitted its bid for two project packages. However, the company’s proposed costs exceeded the government’s estimated budget, which should have disqualified it from consideration.

Reselling contracts for illicit profits

Despite the inflated costs, former Vinh Tuong District Vice Chairman Khong Van Thuyet approved adjustments to the contract pricing, citing an increase in minimum wages under Government Decree No. 70/2011/ND-CP. The project evaluation team then gave Phuc Son a favorable assessment, leading to direct contract awards for two construction packages:

Package 1: Contract valued at 47.1 billion VND ($1.84 million)
Package 3: Contract valued at 1.04 trillion VND ($40.7 million)

During construction, Vinh Tuong District authorities failed to monitor or supervise the project, allowing Phuc Son Group to subcontract the work to five unapproved companies. These subcontractors were required to pay Phuc Son a total of 58.4 billion VND ($2.3 million) in kickbacks.

For the portions of the project Phuc Son did execute directly, Hau demanded payments from 11 material suppliers, accumulating an additional 231.1 billion VND ($9.1 million) in illicit profits by inflating material costs.

In total, Hau and Phuc Son Group illicitly profited over 289 billion VND ($11.3 million), siphoned from state funds intended for infrastructure development.

Violations of public procurement laws

Investigators assert that Hau’s fraudulent activities, including bid rigging, insider information leaks, and contract reselling, violated Vietnam’s 2005 Bidding Law and Government Decree No. 85/2009/ND-CP, which governs direct contracting eligibility.

The case implicates multiple officials, including individuals within Vinh Tuong District’s government, Phuc Son Group, and associated auditing firms, all of whom played roles in facilitating Hau’s illicit profiteering.

Authorities continue to expand the investigation, with further legal actions expected against those involved.

T. Nhung