Stock manipulation in vietnam, DVD case!

This stock manipulation case in Vietnam (HOSE: DVD) is probably the most interesting case I have ever seen in my life (certainly, it is totally different from what i watched the blue-star case of Micheal Douglas).

According to local newspapers, DVD was charged for stock manipulation, setting up subsidiary companies to inflate revenue…The police is investigating if such crime does exist.

Based on facts, prospectus of DVD, information published by the Company, i have a different or even strange view as the following.

Hostile take over DHT
– Most of the transactions were put through and all informed publicly by DVD. If charged for manipulation, many should be in prison not only DVD’s team? Why they want to take over DHT, some DVD senior managers were ex managers of DHT and they know what value DHT has. Is there any one behind the scene want DHT as well?
– In their Annual general shareholder meeting, documented in the resolution, they aimed to buy 2-3 companies per year. So their target is not only DHT. Currently they are holding 20% of savipharm (HCM based pharma, in Tan Thuan IZ)

Fake revenue (informed by SSC and newspapers):
– fact is: DVD has 3 companies (E&Y audit 2009)
– in pharma industry, to legalize the commission to doctors (no invoice) the company has to sell to different companies, different layers to record the expenses, especially local pharmaceutical companies.
– At the end of the day, we see the consolidated report rather than separate one, in consolidated one, they will adjust double income if any.
– If fake revenue, where do they pay corporate income tax (CIT) which is corresponding to the income (25 billion vnd in 2009 and 45 billion vnd in first 9 months), the 1H10 was audited by E&Y also.
– 1Q10, they paid out 25% dividend in cash

No transparency
– Not so many companies like DVD has quarterly report on time and in detail to sub categories
– Audited by E&Y, the big 4, and they said it is true and fair (so we might question E&Y capability)
– what they said in AGM resolution, they all informed

Cheating
5 big names are cheated when doing business with DVD. If that is the case, the guys are genius. This is also a lesson for me to evaluate a business as well
– 3 foreign banks with strict credit assessment failed to assess their clients (names of these are in audit report)
– A Scandinavian institution is a shareholder of many local companies, holding 3M shares (~15%) of DVD, failed the DD test?
– A big 4 (E&Y) audit team was unable to recognize false statement
– Tax department only like money, they don’t need to know what income generates such tax. In other words, does tax department know if the income was not real?

Question?
– why only DVD team is in jail while many obvious cases are available?
– 500 billion (25 m usd) was evaporated due to technical price adjustment. Who will pay for those unlucky shareholders?
– is there anyone benefit behind this case?
– DHT has many valuable piece of land in HN (DHT prospectus)?

The pessimist sees risk in opportunity; the optimist sees opportunity in the risk.   “In Vietnam, anything can happen, but nothing is impossible”