Coteccons is penalized for internal transactions in the past

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The sanction decision was made by the Inspector of the State Securities Commission on April 28. In which, Coteccons was fined 70 million VND for not disclosing transactions between the company and related persons in the Management Report of 2019 and the first 6 months of 2020.

This enterprise was also fined 85 million VND for violating the regulations on corporate governance regarding transactions with related persons of the members of the Board of Directors.

Specifically, according to the separate audited financial statements of 2019 and the mid-year 2020 review financial statements, the company has transactions with insider-related organizations. However, these transactions have not been approved by the General Meeting of Shareholders and the Board of Directors.

2019 and mid-2020 are the time when conflicts are raised between the executive board, headed by Mr. Nguyen Ba Duong, and a group of foreign shareholders, represented by Kusto. One of the problems at that time was that the group of foreign shareholders said that there was a conflict of interest in operating this business.

At that time, Kusto analyzed, some members of the Coteccons leadership simultaneously held important management positions at Ricons, including the position of chairman and legal representative. This enterprise, apart from being a subcontractor of Coteccons, is also a direct competitor in the field of general contractor, design and construction of the same segment.

This raises the question, how does the top management of Coteccons choose the bidder for the project when they simultaneously manage both directly competing businesses; as well as how the profits are distributed to each party in the contracts.

What is shown on the business results of Ricons and Coteccons has made this group of investors question more. Meanwhile, Coteccons leaders said that with large projects, the company cannot focus all its resources, but must manage subcontractors directly.

The end of this conflict is that Mr. Duong left the position of the top leader of Coteccons at the end of 2020 and represented Kusto in this position.

Source: vietnamfinance.vn – Translated by fintel.vn