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City official arrested in loan scandal

October 13, 1997

HO CHI MINH CITY, Vietnam (AP) _ A mid-level city official in Ho Chi Minh City has been arrested and charged with loan fraud in connection with a growing scandal in southern Vietnam.

Ho Chi Minh City official Pham Tan Khoa was arrested for illegally authorizing the use of state property to secure loans for Vietnamese steel company EPCO, the state-run Saigon Times Daily reported Monday.

Khoa served as deputy chairman for the People’s Committee in Ho Chi Minh City’s District 3.

Officials from EPCO and troubled textile exporter Ming Phung, along with several bank executives, have been implicated in a loan scandal that could amount to as much as $700 million, state media reported.

At least 59 company officials and executives have been arrested in connection with the months-old scandal.

Earlier this year, seven bank executives in Ho Chi Minh City were arrested and accused of falsifying loan collateral evaluation certificates to help textile exporter Ming Phung secure large loans from the banks.

Five of the executives worked for the state-run Vietnam Bank for Industry and Commerce and two others for the Vietnam Bank for Foreign Trade.

Ming Phung, once a successful company, is now under investigation for loan fraud involving hundreds of million of dollars in debts that it is unable to repay.

Tang Minh Phung, the company’s top executive, was arrested in March and at the time was linked with another corporate scandal involving EPCO.

Minh Phung allegedly borrowed steel and other industrial goods from EPCO to put up as collateral for a $17 million loan from the state-controlled Vietcombank.

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