VNS: Former Vietnam Steel Leaders Face Prosecution Over $160M EPC Contract

Overview

The Ministry of Public Security’s investigative agency has recommended prosecution of former leaders of Vietnam Steel Corporation (VNS) for approving a $160 million EPC contract that caused losses of more than VND 532 billion. The case relates to the Lao Cai steel plant project developed by Viet Trung Mineral and Metallurgy Co. (VTM), a joint venture involving VNS, LAMICO and China’s KISC. The recommendation is contained in a supplementary investigation conclusion.

Key Facts

• Former VNS Chairman Mai Van Tinh and former CEO Dau Van Hung are among those recommended for prosecution.
• Other former VNS officials named include board members Dang Thuc Khang, Nguyen Minh Xuan, Le Phu Hung and former Deputy CEO Nguyen Trong Khoi.
• The EPC contract was valued at approximately $160 million, initially tendered at around $98.7 million.
• The project, Lao Cai steel plant, had a designed capacity of 500,000 tonnes per year and initial investment of over VND 2,430 billion.
• Losses from the contract are estimated at more than VND 532 billion.
• The tender was cancelled in favor of sole-source award to KISC after two failed bidding rounds.
• KISC’s final price was about $159.4 million, while four other Chinese contractors quoted $126–143.8 million.

What Happened

According to the supplementary investigation conclusion, VTM was the investor for the Lao Cai steel plant in Tang Loong Industrial Park. The EPC package No. 2 covered design, equipment supply, construction and installation of the iron and steel smelting line. Initially, an international tender was held with a price of about $98.7 million. After technical adjustments, including replacing two blast furnaces with one larger furnace, VTM re-approved the package at about $98.3 million in early 2009. However, the tender failed as both bidders’ proposals did not meet requirements and their prices were nearly three times the approved level.

To expedite the project, VTM leaders proposed cancelling the tender and designating KISC to execute the EPC package. Representatives of the three shareholders—VNS, KISC and LAMICO—met and agreed to cancel the tender, assign KISC, and require independent re-pricing. Subsequently, VTM contacted several Chinese contractors and hired Infisco to recalculate the total investment. Chinese contractors quoted $116–140 million, while French consultant SOFRECO estimated about $164.5 million. Infisco then determined the package price at about $157.6 million, including contingency. On 23 April 2009, Dau Van Hung signed a proposal to VNS’s board to approve an EPC price of $128 million, excluding contingency, as a basis for negotiation with KISC. Five days later, Mai Van Tinh signed a resolution approving this price. By mid-May 2009, KISC quoted nearly $200 million, leading to further negotiations. By late June 2009, KISC reduced its price to about $159.4 million, while four other Chinese contractors quoted $126–143.8 million.

Market Context

VNS is listed on the HOSE exchange. The stock closed at 6,540 on 8 October 2026. The steel sector in Vietnam has faced headwinds from global price volatility and domestic demand fluctuations. This legal action adds a governance and reputational overhang for VNS, though the events date back to 2009 and involve former leaders. The broader Vietnamese market has been sensitive to regulatory and legal developments, particularly those involving state-owned enterprises.

Strategic Significance

The prosecution underscores ongoing efforts to address historical governance failures in Vietnam’s state-owned enterprise sector. For VNS, the case highlights past weaknesses in project management and capital allocation that may have eroded shareholder value. While the current leadership is not implicated, the outcome could influence investor perception of the company’s risk management and internal controls. The case also serves as a cautionary tale for joint ventures involving foreign partners, particularly in capital-intensive industries like steel.

What to Watch

• The formal indictment and trial schedule, which will clarify the legal proceedings and potential penalties.
• VNS’s official statements on the case and any provisions or contingencies it may disclose.
• Updates on the Lao Cai steel plant’s operations and financial performance.
• Any regulatory changes to public procurement and state-owned enterprise governance stemming from this case.
• The stock’s reaction to legal developments and any impact on foreign investor sentiment.