Gov’t Inspectorate proposes investigation into Mobifone’s purchase of AVG

The Government Inspectorate (GI) has announced conclusion of its inspection of the acquisition of Audio Visual Global (AVG) by State-owned communications giant Mobifone (Source: anvientv.net)

In an announcement issued on March 14, the GI said the case was extremely serious, as Mobifone, the Ministry of Information and Communication and related agencies had committed many wrongdoings during the process of acquisition.

Thus the GI recommended that the Prime Minister instruct the Minister of Information and Communication to consider and annul the decision approving Mobifone’s investment in television service and transfer the case to the Ministry of Public Security for investigation.

The GI’s inspection found that Mobifone was irresponsible and broke regulations in the acquisition, especially in the assessment of AVG’s financial situation, allegedly leading to State budget losses of 7 trillion VND, and affecting Mobifone’s finance in following years, resulting in difficulties in the equitisation of the company.

AVG faced difficulties from its establishment to the time of business valuation in March 2015, with accumulated losses of more than 1.6 trillion VND, accounting for 45 percent of its charter capital.

However, Mobifone was dishonest in reporting the financial situation of AVG to the Ministry of Information and Communications (MIC) during the acquisition process.

According to the GI, the assessment violated regulations in investment and managing and using State capital in enterprises.

The GI stated that the responsibility for the wrongdoings went to the Board of Members, Board of Directors, the chief accountant and other relevant departments of Mobifone.

The GI was also of the view that the Ministry of Information and Communication (MoIC), as the representative of the State ownership and the State agency in charge of management of information and communication, showed a lack of responsibility in assessing the acquisition. It decision 236/QD-BTTTT dated December 21, 2015 approving the acquisition had violated legal rules, causing serious losses of State capital and thus must be annulled, the GI said.

In addition, the acquisition was not eligible for being classified as a State secret, but the ministry asked the Ministry of Public Security to include it in the list of classified information, which violated Articles 5, 14 and 17 of Decision 36/2014/QD-TTg on issuing regulations on the publishing of information of State-owned one-member limited liability companies.

MoIC officials in charge of the case must bear responsibility for the violations, the GI said.

A day before the GI’s announcement, Mobifone and AVG decided to cancel the transfer of 344.66 million shares and refund each other the amount received under the agreement.

AVG shareholders will refund the entire amount paid by Mobifone, while Mobifone will return to AVG the number of shares and assets transferred. The two sides will also try to not let the other party suffer more damages.

In addition to the amount paid to AVG, Mobifone said it had to pay some related expenses, such as consultants’ fees. AVG has agreed to share this expense with Mobifone.

In early 2016, Mobifone announced the acquisition of AVG to expand its television network, one of the company’s four main business areas. The details of the deal were not disclosed.

In August 2016, the Government promulgated Document No 1344/TTg, asking the GI to investigate the acquisition.

On March 9, the Party Central Committee’s Secretariat issued a letter on the handling of Mobifone’s acquisition of 95 percent of AVG shares, calling the issue a serious, complicated and sensitive matter, and asked the GI to soon release the inspection results.

The Secretariat assigned the Government and the GI to review and handle the case in an objective and accurate manner to ensure that punishment is given to the right person and lost State assets are revoked./.

VNA