Property developer FLC sees total assets fall 40% since chairman's arrest
Real estate developer FLC Group’s total assets have fallen 40% to an estimated VND21 trillion ($827.4 million) since 2022 when its then chairman Trinh Van Quyet was arrested for alleged stock market manipulation.
![An FLC building in Hanoi. Photo courtesy of the group.](https://i.ex-cdn.com/theinvestor.vn/files/content/2024/07/16/flc-the-investor-1030.jpg)
An FLC building in Hanoi. Photo courtesy of the group.
The entire FLC system now has 14 subsidiaries and one affiliated company, with staff cut by 60% to 3,500, FLC said at an extraordinary shareholders' meeting early this year.
FLC Group was originally a law office founded by Quyet in 2001. After 10 years of development, the firm was officially named FLC Group and listed on the stock exchange. FLC took resort real estate as its core and then developed into an ecosystem covering many segments such as real estate, aviation, education, high-tech agriculture, medicine and pharmacies, construction, and mining.
In 2021, Quyet revealed his ambition to develop up to 400 large-scale multi-utility real estate projects, forming closed ecosystems in potential areas, unexploited or little exploited. He also aimed to turn Bamboo Airways into a fully digitized airline occupying 30% of the domestic aviation market share with a fleet of at least 50 aircraft.
However, after his illegal sale of 74.8 million FLC shares on January 10, 2022, Quyet found himself in the sights of the authorities. In March 2022, the Ministry of Public Security launched legal proceedings against and detained Quyet to investigate stock manipulation and concealing information on stock activities, causing serious damage to investors and affecting market operations.
Investigators also said that Quyet and his accomplices carried out procedures to fraudulently increase the charter capital of Faros Construction JSC (ROS) from VND1.5 billion to VND4.3 trillion ($169.4 million) to appropriate more than VND3.62 trillion from investors.
Getting stuck
Since its chairman got into trouble, FLC Group has been in a deadlock and has struggled to restructure. The group reported a total loss of VND1.89 trillion ($74.5 million) in the first three quarters of 2022. Up to now, FLC has not been able to issue financial statements and audited financial statements for 2021, 2022, 2023 or the first quarter of 2024 because the group and UHY Auditing & Consulting Company Limited have not reached a consensus on the audit of its separate and consolidated financial statements ending December 31, 2021.
As a result, even though FLC shares were moved to the Unlisted Public Companies Market (UPCoM) after delisting from the Ho Chi Minh Stock Exchange (HoSE), investors still cannot not buy or sell. The reason for this is that the company had seriously violated regulations on information disclosure, so its shares were suspended from trading by the Hanoi Stock Exchange as soon as they landed on the UPCoM.
In addition, FLC Group has not yet prepared full documents to hold its 2022 and 2023 AGMs to discuss important decisions on business plans and development orientations.
Its extraordinary shareholders' meetings were only successful when they were held for the second time, mainly discussing personnel issues.
At the most recent extraordinary AGM in early 2024, five people were appointed to the board of directors, including Le Ba Nguyen as chairman. The supervisory board includes three members headed by Nguyen Xuan Hoa. The CEO is Le Tien Dung, while Nguyen The Chung serves as chief accountant.
FLC has also been forced to pay taxes with the deduction of money from its accounts.
In addition, a series of projects have been revoked in localities nationwide, such as Thanh Hoa, Thai Binh, Quang Ngai, Hoa Binh, Binh Phuoc and Kon Tum. Some projects started by FLC have also stagnated or been suspended.
Raising capital for business activities
According to its 35th amended business registration certificate dated March 26, 2024, FLC has a charter capital of VND7.1 trillion ($279.75 million), unchanged from 2022. The group's new leadership wants to mobilize money from individuals and organizations to feed its business activities. The policy has been approved, but there no detailed plan has been issued.
This year, the group is continuing to restructure core areas, focusing on real estate, resorts and M&A projects.
In the real estate business, FLC is implementing seven key projects, such as FLC Premier Parc in Hanoi, C4C5 Thanh Hoa in Thanh Hoa province, Ha Long Villa and Tropical 1&2 in Quang Ninh province, HH1 and HH4 apartment projects in Hanoi. The company is also preparing to carry out six more projects in the Central Highlands provinces of Gia Lai and Kon Tum, along with Thanh Hoa, Binh Dinh and Quang Binh in central Vietnam.
In the hotel and resort tourism segment, the group will focus on operating resort complexes like FLC Ha Long, FLC Sam Son, FLC Quang Binh and FLC Quy Nhon, and maximizing room capacity to ensure cash flow for its business operations. It is also looking for potential partners to negotiate cooperation plans for exploitation and operation of some items at these complexes.
The group hopes to earn VND1,213 billion ($47.8 million) in revenue from this segment and VND1,187 billion from the real estate business this year.
Nearly 100,000 investors to be summoned for Quyet’s trial
The trial of Trinh Van Quyet and his accomplices at FLC Group JSC and related units will open on July 22, according to the Hanoi People’s Court.
Among the 50 accused in this case, 13 are from FLC Group. They include Trinh Van Quyet, former chairman of FLC Group and former chairman of Bamboo Airways; Trinh Thi Minh Hue, former accountant of FLC Group, Quyet's younger sister; Trinh Thi Thuy Nga, former accountant of FLC Group, also Quyet's younger sister; Huong Tran Kieu Dung, former permanent vice chairwoman of FLC Group and chairwoman of BOS Securities JSC; and Nguyen Thien Phu, former chief accountant of FLC Group.
Quyet will be tried for fraudulent appropriation of property and stock market manipulation, with his two younger sisters, Trinh Thi Minh Hue and Trinh Thi Thuy Nga, as accomplices.
The jury said it will summon 30,403 investors who bought shares of FLC Faros Construction JSC, coded ROS, in the first offering. In addition, more than 63,000 investors holding this stock will be also called as people with related rights and obligations.
This case also involves a series of former leaders and officials of the State Securities Commission (SSC) and the HoSE. Among them are Tran Dac Sinh, former chairman of the HoSE; Le Hai Tra, former deputy director of the HoSE; and Le Cong Dien, head of the Public Company Supervision Department at the SSC.
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