Scandal-hit LDG real estate projects in legal hot water
Projects run by the scandal-hit LDG Investment JSC have been found to show legal irregularities, with some built illegally and others remaining on paper despite being launched for sale a long time ago.
Illegal buildings
Once one of the most famous businesses in the real estate market, Ho Chi Minh City-based LDG and its chairman Nguyen Khanh Hung have left behind scandals surrounding projects the company invested in and developed.
Many of its projects have incomplete legal procedures and involve unresolved disputes, lawsuits, and complaints.
Noteworthy among those is the Tan Thinh Residential Area (Viva Park) project in Doi 61 commune, Trang Bom district, Dong Nai province which has been caught committing several violations including the construction of almost 500 properties without permission, non-payment of compensation to displaced residents, and sales of the illegally built properties.
The project has left LDG chairman Nguyen Khanh Hung in legal trouble. He was arrested on Thursday for "deceiving customers", an offence under Article 198 of the Penal Code.
Approved by the authorities in 2018, the VND1 trillion ($41.15 million) project, touted as a pioneering “smart” urban area, was said to have 488 villas and 290 townhouses, schools, supermarkets and medical facilities built on 18.22 hectares that were home to rubber plantations.
Also in 2018, LDG put the project up for sale through real estate trading floors at a price of about VND1.8 billion ($74,070) per townhouse and VND2.2 billion ($90,530) per villa.
However, in August 2020, the southern Vietnam real estate market was shocked by the news that LDG illegally built hundreds of townhouses and villas at the Viva Park project.
At that time, Viva Park had sold 70% of the properties for VND1.9 billion per townhouse and VND2.5 billion per villa. Site clearance had been completed, but only about 60% of technical infrastructure had been installed, while the construction of 488 houses, including 198 villas and 290 townhouses, had been completed. Meanwhile, 192 other townhouses were under construction.
Chairman of the Dong Nai provincial People's Committee Cao Tien Dung issued a decision imposing a fine of VND6.3 billion ($259,260) against LDG for administrative violations.
At the third annual general meeting of shareholders 2022 in late June 2022, LDG chairman Hung revealed that the progress of many projects in Dong Nai province, which borders Ho Chi Minh City, had stagnated due to inspections since 2020. Inspection results indicated that LDG had made administrative violations for construction orders, but showed no signs of criminal violations, he said.
In early April 2023, Dong Nai inspectors concluded that LDG had not been allocated the land, allowed to change land use purposes, or granted a construction permit. However, the enterprise had embarked on building 680 houses, with 488 completed and 192 under construction.
The project did not qualify for pre-sale, but LDG signed principle contracts to sell houses to 60 customers for more than VND132 billion ($5.43 million). Buyers paid the company 25-95% of their contract value and seven households have moved in.
Ineligible projects for sale
When talking about LDG, it is impossible not to mention its West Intela and High Intela projects in Ho Chi Minh City. In 2017-2018, the two projects were advertised and opened for sale by Nam Saigon Real Estate Development and Investment JSC, a subsidiary of LDG. The developer advertised the smart apartment projects with convenient locations and affordable prices, suitable for young people.
Believing Nam Saigon and LDG to be large and reputable investors, many people put money down to buy apartments. At that time, the investor committed to handing over the apartments in the third and fourth quarters of 2019, but the projects were still on paper. The company continued to make commitments but now dozens of customers do not have homes to live in and the projects remain in limbo.
Nam Saigon and LDG blamed the delays on objective reasons such as changes in government policies, slow procedures at competent state agencies, and overlapping legal regulations. Therefore, they refused their obligation to pay back deposits or interest to customers.
Meanwhile, inspectors from the HCMC Department of Construction confirmed that both projects were not eligible for sale as they failed to complete legal procedures. However, the investor had still offered them for sale, received deposits and signed sale-purchase contracts, collecting tens of billions of Vietnamese dong (VND10 billion = VND411,700) from buyers.
Dozens of customers who bought apartments in the two projects shared that Nam Saigon and LDG have left many families without a home and now they just want to get their money back to cover living costs.
LDG’s violations do not stop there. The LDG Sky project, with five 30-storey blocks, located in Binh An ward, Di An town, Binh Duong province, is also in trouble. This project has been up for sale since the end of 2020. In early 2022, a series of customers hung banners demanding their money back. They reported that the project had been offered for sale more than a year, but its legality remained in question.
After the LDG chairman was arrested, the share price of the company, listed on the Ho Chi Minh Stock Exchange as LDG, plummeted to its floor of VND3,450 ($0.14) on Friday.
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