Vu Lien Oanh, former director of Quang Ninh province’s Department of Education and Training, has been accused of colluding with a private company leader to use transfer pricing for illegal gains.
According to the Ministry of Public Security, the New Successful Journey Group Company Limited (NSJ) belonging to Hoang Thi Thuy Nga had not signed contracts to import goods directly, but instead used overseas third parties to raise prices.
After finishing an investigation into the criminal case of “violating regulations on bidding, causing serious consequences", which occurred at Quang Ninh province's education and training department and related units, the agency has plans to prosecute Vu Lien Oanh, Hoang Thi Thuy Nga, chairwoman of NSJ's founding council, and their accomplices.
The investigation found that from 2016 to 2019, Nga colluded with Oanh to implement six bidding packages worth VND642 billion ($26.98 million). In 2016, Nga's company signed contracts to import goods directly from U.S. and U.K. manufacturers. But from 2017, NSJ started buying products for its projects through overseas third parties.
Specifically, it signed contracts to buy goods from SmartGroup America and Genee World Limited of the U.K. through New York-based Capital Link Inc. and Golden Spring Trading Ltd., Co., of the Philippines. NSJ colluded with these companies to raise product prices, it is alleged.
In 2016, NSJ directly signed a goods purchase contract with Modular Robotics Incorporated of the U.S. with a price of more than VND31.3 million ($1,300) per unit. In 2017, the contract was signed through Golden Spring Trading Ltd., Co., with more than VND44.8 million ($1,880) per unit, an increase of over VND13.4 million per unit compared to 2016.
Meanwhile, the price of Genee World Limited products was raised from over VND29.03 million ($1,220) per unit in 2016 to VND56.03 million ($2,350) in 2017, a rise of over VND27 million per unit, after NSJ signed the contract through Capital Link Inc.
In 2016, the total value of NSJ’s cleared imports was over VND28.3 billion ($1.19 million), but the figure on the project records exceeded VND53.7 billion ($2.25 million), resulting in a difference of more than VND25.3 billion ($1.06 million) or nearly 100%. In 2017, the difference was over VND22.4 billion ($941,373), or 40%.
During the investigation, Nga admitted that in 2016, she met and agreed with Oanh and Ngo Vui, then head of the Department of Education and Training’s planning and finance division, to let staff at Nga’s company to bid for six projects by every means necessary to sell education products and equipment to kindergartens and primary schools in Quang Ninh province.
Between 2016 and 2019, Nga ordered her subordinates to make quotations, and then asked companies with close relations to sign and seal them to provide the Department of Education and Training and other relevant agencies as a basis for approving the projects and their budget estimates, she said.
As the direct bidding procedure required at least three participants, Nga asked partner companies to bid as well to ensure a sufficient number of participants. Those companies then withdrew from the process and NSJ won the tenders.
The investigation police agency determined that the violations by Vu Lien Oanh, Hoang Thi Thuy Nga and other defendants had caused losses of more than VND80.2 billion ($3.37 million) to the state budget.
After completing the projects, Nga gave a total of VND14 billion ($588,360) to Oanh, VND14.8 billion ($621,980) to Vui, and VND1.85 billion ($77,750) to Ha Huy Long, former deputy head of the Department of Education and Training’s planning and finance division.
The agency also ordered the assets of Oanh and Long to be frozen. Oanh's assets include eight properties in Quang Ninh province and one car, while Long has two properties, one car and three savings accounts worth $5 billion ($210,128).