Power struggle affects Hoa Binh construction 'empire'

A "war of power" is taking place in Hoa Binh Construction Group (HBC), one of the leading construction contractors in Vietnam, following recent conflicts between its board members related to the position of chairman.

The group has just released a statement affirming that it disclosed information in accordance with stock market rules, and that all information not issued by Hoa Binh and its legal representative Le Viet Hai is void.

"From January 1, 2023, all information, contents and documents not officially issued by the group and its legal representative, Le Viet Hai, are invalid. The group is not responsible for any information released by individuals and organizations on behalf of Hoa Binh to commit illegal acts," according to the statement.

This statement came in the context of Hoa Binh's internal conflict between board members related to the position of chairman.

More than two years ago, on July 23, 2020, Hoa Binh approved the resignation of Le Viet Hai as CEO and appointed Hai’s son - Le Viet Hieu to this position. This move was in line with the regulation on corporate governance, stipulating that a listed company’s chairperson cannot concurrently be its CEO.

As Hieu’s appointment decision expired after two years, on July 23, 2022, he was moved to the position of standing deputy CEO in accordance with the current legal provision that the CEO must not be a family member of the company’s leader.

On December 12, 2022, Hai applied for resignation from the positions of board chairman and member, which was expected to take effect from January 1, 2023. This was considered a step for Hoa Binh's generation transfer plan to ensure the legality of the nomination of Le Viet Hieu as CEO at the general meeting of shareholders 2023.

Following Hai's resignation, the group appointed Nguyen Cong Phu, an independent member of the board, as chairman. The appointment was also expected to become effective from January 1, 2023. Phu, born in 1951, had been working for Hoa Binh since 2021 at the invitation of Hai, right after quitting his job at Apave Group.

In addition, Hoa Binh also approved the establishment of a "founding council" with Hai as chairman.

The above decisions received absolute consensus from all eight board members, including Hai, at a meeting on December 13, 2022, and were included in the resolution of the board on December 14.

However, on December 31, 2022, Hoa Binh said it would postpone the approval of Hai's resignation as a board member. At the same time, the firm had not yet elected Nguyen Cong Phu as chairman, replacing Hai, and appointed Le Viet Hieu as CEO. In addition, it also postponed the establishment of the founding council, with Hai expected to be chairman.

Hoa Binh revealed that the postponement aimed to strengthen the legal foundations and firmly establish a new governance model in the implementation of the above decisions. It also wants to ensure its smooth operation during the run-up to the Lunar New Year holiday (Tet).

On January 1, 2023, four members of the company’s board namely Nguyen Cong Phu, Le Quoc Duy, Duong Van Hung and Albert Antoine suddenly issued a press release refuting the above contents and requesting Hai not to take any actions that hinder the succession of Phu.

The release said that with the intention of canceling the decisions made at the board’s meeting on December 14, 2022, Hai repeatedly convened the board’s virtual meetings on December 29 and 31 but failed.

This group said that they had sent a written notice to Hai to refuse his meetings as they were not in accordance with the group's regulations. Therefore, any decisions adopted are invalid, they noted.

Meanwhile, Hai affirmed that his return to the position of HBC chairman was completely in line with the law.

Hoa Binh Group, listed on the Ho Chi Minh Stock Exchange (HoSE) as HBC, closed at VND9,210 ($0.39) on the December 30 session.

The group targeted respective revenue and after-tax profit of VND17,500 billion ($747 million) and VND350 billion ($14.94 million) for 2022.

Hoa Binh is the construction contractor of many large projects with high technical requirements in Vietnam like the Tan Son Nhat International Airport expansion terminal, Boutique Hotels Cocobay Danang, multi-function complex Saigon Center, and five-star Le Meridien Hotel.