Inspection reveals major failures in government funded projects
16-05-2012
Investment in the construction of Dinh Tien Hoang Square in Ninh Binh tripled to over VND1.5 trillion (USD71.87 million)
The majority of the inspected projects were managed by the Ministry of Planning and Investment. Wrongdoings also included suspect selections of contractors and the advance provision of capital outstripping the pace of project implementation.
Corrupt bidding
Several projects have revealed shortcomings in the bid tendering process. The Ministry of Transport and local governments in some localities mistakenly assigned differently valued construction packages to the same contractors, leaving the contractors over-extended, resulting in stagnant construction of several projects. The project to build Dinh Tien Hoang Square in Ninh Binh was one example.
The project was approved by the provincial government in May 2009 with a total investment of VND450 billion (USD21.56 million). However, three months later, the provincial Department of Culture, Sports and Tourism, the project’s investor, increased the investment to over VND1.5 trillion (USD71.87 million).
The investor assigned the major construction bidding package worth over VND1 trillion (USD47.91 million) to the Xuan Truong Construction Enterprise.
In 2012, the investor advanced over VND747 billion (USD35.79 million) to the company despite the company only completing work valued at just VND145 billion (USD6.94 million) by the end of October 2011.
The provincial Department of Culture, Sports andTourism continued to favour several other contractors.
It selected Dong Duong Construction Appraisal Consultancy Limited Company as a quality appraisal consultant. In 2010, it disbursed VND3.4 billion (USD162,913) to the contractor, compared to a total of VND2.8 billion (USD134,163) for the work completed during the period.
Huong Giang Limited Company was appointed as construction supervisor, and received funds of VND4.6 billion (USD220,412) in 2010, yet it had only completed work worth VND1.7 billion (USD81,456).
A project to build Trang An tourism area in Ninh Binh was approved in 2004 with an initial capital of nearly VND580 billion (USD27.79 million). Until now the project’s investment has been increased to nearly VND9 trillion (USD431.24 million) after several adjustments.
The Xuan Truong Enterprise was also selected to do irrigation work worth over VND560 billion (USD26.83 million). By the end of 2010, the project’s investor had disbursed nearly VND400 billion (USD19.16 million) to the contractor, compared to VND239 billion (USD11.45 million) for the work completed.
The Xuan Truong Enterprise was also given the transportation tender worth over VND302 billion (USD14.47 million). It received VND185 billion (USD8.86 million) in advance by the end of 2010, but had only completed VND99 billion (USD4.74 billion) of work during the period.
This enterprise was also chosen as contractor of several other projects under the management of the Ministry of Transport.
Phu Tho provincial Department of Transport, the investor in a project to expand a section of National Highway No. 32C running through Viet Tri City, allocated a tender worth VND554 billion (USD26.41 million) to the Xuan Truong Enterprise. Construction started in November 2009, yet only 27.2% of the workload was completed after a two-year construction period.
The same situation was recorded at a project to expand a section of National Highway No. 1 running though Thanh Hoa City. The provincial Department of Transport selected Xuan Truong Enterprise as the contractor for tender 5.1 valued at VND537 billion (USD25.73 million). The construction, however, was carried out at a snail’s pace.
Xuan Truong was also selected as contractor of two other bidding packages belonging to National Highway No. 1A project and National Highway No. 10 project in Ninh Binh Province. The investment of the packages increased by VND800 billion (USD38.33 million) from an initial investment of over VND675 billion (USD32.34 million).
Ministry of Planning and Investment held accountable
The Government Inspectorate discovered shortcomings in the appointment of contractors, following abuse by local authorities of loop holes in Ministry of Planning and Investment guidelines. This allowed them to appoint contractors without having to go through legitimate tendering processes.
The inspectorate concluded that the Minister of Planning and Investment as well as head of the Department of Auction Management would be held accountable for these issues.
The agency proposed the Prime Minister request ministries and branches that had wrongly appointed contractors to investigate corruption in the appointment of contractor, capital allocation and possible losses to the national budget. All the reports would be sent to the Prime Minister for consideration.
According to the Ministry of Planning and Investment, as of December 31, 2010, five ministries and 43 localities had received approval to appoint contractors in 1,463 packages worth over VND49.599 trillion (USD2.37 billion) under 286 projects. Of the total, 757 packages valued at VND13.016 trillion (USD623.67 million) were completed in 2010.
As many as 491 packages worth over VND24.581 trillion (USD1.17 billion) were contracted in 2010 but construction was delayed to 2011. A total of 215 remaining packages valued at nearly VND8.268 trillion (USD396.16 million) have yet to be contracted.
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