Suspicions around Vinaland’s Saigon South Plaza
Suspicions around Vinaland’s Saigon South Plaza
Dau Tu Bat Dong San (Real Estate Investment) newspaper, VIR's sister publication, has covered in three recent articles the dispute around Vinaland Invest Corp (UpCOM: VNI) related to the fact that the company raised capital via “certificates of home purchase," as well as the company’s internal dispute. Nevertheless, VNI is still selling apartments in the disputed building, which it has renamed.
Land-use fee still unpaid
Recently, District 7 of Ho Chi Minh City was awash in advertisements of apartments for sale in the Saigon South Plaza project. Dau Tu Bat Dong San reporters found that this is just a name change from VNI’s Vinaland Tower in order to mislead customers.
Disguised as a home buyer, Dau Tu Bat Dong San reporters approached a sales agent ofagent the project. When asked why the project changed its name, this person said the investors changed the name due to legal problems. The agent did not explain the legal problems and only said that these problems occur often in the market, and that for now, contracts will use both names.
Also according to this agent, the project is selling several types of apartments, including 2-bedroom units at 68-69 square metres ranging from VND1.5 to 1.7 billion ($65,865 - $74,647).
“Currently, the contracts the developer signs with customers are agreements to contribute funding to the project. On May 1, when the construction of the foundation is finished, they will sign a sales contract,” the agent said. He also asked for the reporters’ phone number and, upon their request, promised to provide the project’s legal documents, but never followed up.
Based on Dau Tu Bat Dong San reporters’ research, VNI assigned Do Thanh Land JSC with the task of selling the apartments in the project. VNI also authorised Do Thanh Land as the only agency to collect deposits and payments from customers. Currently, the project is widely advertised as Saigon South Plaza, but information has been confusing, so apartment buyers in this project might face some risks.
To get more clarity on Vinaland Tower, Dau Tu Bat Dong San asked the Ho Chi Minh City Department of Natural Resources and Environment whether the project has paid land-use fee and whether its capital raising practices are legal.
On March 10, 2017, the Department responded in letter No. 2253/STNMT-QLD. Accordingly, the project was given land to build. However, until now, the developer has not completed the procedures to receive land-use certificate (paying land-use fee). Regarding fundraising, the Department has asked the company to follow the current laws and regulations.
Therefore, it is apparent that until now, Vinaland Tower has not met its financial obligations to the government and has not a received land-use certificate. However, VNI publicly raised capital from customers.
Aside from legal murkiness, the company is also having an internal controversy that has not been resolved, which could seriously impact homebuyers.
According to Dau Tu Bat Dong San reporters’ research, before deciding to start building Vinaland Tower, VNI held an extraordinary general meeting to discuss transferring this project along with Phuoc Long Market (District 7, Ho Chi Minh City). However, the transfer of these projects—Vinaland Tower for VND140 billion ($6.1 million) and Phuoc Long Market for VND250 billion ($10.98 million)—was not approved.
From this aspect, Tran Minh Hoang, former chairman of Vinaland and a major shareholder, told Dau Tu Bat Dong San newspaper that a group of shareholders with 40 per cent stake did not know about this plan at all.
“In principle, every partnership or contractor agreement for the Vinaland Tower must be approved by the general shareholders’ meeting, because they are worth over 35 per cent of the company’s assets as per the latest accounting rules (Article 162 of Enterprise Law 2014). However, if the shareholders’ meetings to discuss these agreements have not been called, there is no basis to go into any investment cooperation agreement or contractor agreement with Do Thanh Land.”
There are no grounds for Do Thanh Land to become the developer as advertised and collect homebuyers’ payments, Hoang said, and added that a group of shareholders’ with a 40 per cent stake did not even know if the company has paid land-use fee.
Without paying the fee, there is no legal footing for the company to build the project, according to the Law on Real Estate Business, and therefore cannot sign agreements and collect payment from buyers. Thus, disputes may arise, and if so, customers will suffer the most.
Beware of risks
Not only is the legality of the project in doubt, apartment buyers at Vinaland Tower also face uncertainty over the brand and capacity of the developer.
As we previously reported, six years ago, VNI raised capital from customers via “certificates of home purchase,” prompting hundreds of customers to sign and lend VNI up to dozens of billions of VND in total. However, up till now, VNI’s projects still have not been built and anxious customers have been knocking on VNI’s doors wanting their capital and interest money, with little success.
After Dau Tu Bat Dong San newspaper published three articles on the issue, on December 22, 2016, Vinaland issued a statement signed by chief executive Tran Binh Long to the media, saying the company has started building the Vinaland Tower apartment building/commercial centre in Phu Thuan Ward, District 7, Ho Chi Minh City. Along with this statement, Vinaland also issued a press release saying that Vinaland had previously communicated with customers holding certificates of home purchase about refunds. Vinaland said customers could choose to continue with the home purchase plan or request a refund of both principal and interest, pursuant to the home saving rules.
In the press release, the chairman cum chief executive of Vinaland said, “In 2015 and 2016 the company has paid off over VND30 billion ($1.3 million) of debt by the store spaces in Phuoc Long Market, meaning it has paid off 60 per cent of its debt to buyers of the home purchase certificates.”
Upon reading VNI’s press releases, many customers thought they would soon get their money back. However, on February 27, 2017, VNI sent another announcement to customers, saying that it would give refunds in increments 10 per cent at a time until 2019.
“They owe us money, but they sent us this announcement, ordering us to accept the new terms without any other option. When they raised capital, they made grand promises. Now, they pushed us into a corner,” a frustrated customer said.
Former chairman Tran Minh Hoang warned homebuyers at Vinaland Tower to be vigilant to avoid suffering serious losses due to lack of awareness.
“Currently, Vinaland has a tense internal dispute between major shareholders. A group of shareholders with only 30 per cent stake hold all five seats in the board of directors, through dismissing old members and electing new members in a way that another group of shareholders, with 40 per cent stake, is considered completely illegitimate.”
Hoang added, for as long as the disputes within Vinaland remain unresolved, customers who gave money to Do Thanh Land will continue to face uncertainty because they might not have enough legal footing to demand a refund from Vinaland, the true developer of the project.
