Vietnam’s richest man has lost $490 million in 6 hours to a wild rumour

Pham Nhat Vuong, chairman of Vingroup, was believed to be barred from travel, a rumor that cost him $450 million in net worth.

Pham Nhat Vuong, Chairman of Vingroup JSC, listens during an interview in Hanoi, Vietnam on Thursday, December 5, 2019. Photo: Yen Duong/Bloomberg via Getty Image

For days, people were convinced that Vietnam’s most powerful conglomerate was on the brink of a major crisis. On social media, users speculated about the fate of their leader, Vietnam’s enigmatic richest man, who many believed had been banned from leaving the country. Others speculated about what this sinking would mean for Vietnam’s economic and political landscape.

But those murmurs turned out to be false — a wild rumor bubbling up from the social media gossip mill and spiraling out of control. But these posts, which appear to have sprung from a social media user’s imagination, dealt a serious blow to the country’s stock market.

In a trading session on the Ho Chi Minh City Stock Exchange on July 6, Pham Nhat Vuong, the chairman of Vingroup and Vietnam’s biggest billionaire, wiped $490 million from his net worth in 6 hours, according to the Bloomberg Billionaire Index. The country’s stock market also hit a 16-month low as three Vingroup subsidiaries plunged in the VN30 index, a basket of Vietnam’s top 30 stocks.

As the stock market faltered, Vietnamese authorities took action last week, dismissing the rumors and warning people not to share the posts. The Ministry of Public Security said nine people are under investigation for spreading the rumor – including To Vi Hoan, a 38-year-old man from Hanoi who authorities have identified as a source. He was fined 7.5 million dong (US$320) for spreading false information.

As the country’s largest conglomerate, Vingroup has infiltrated various aspects of Vietnamese life, from real estate to smartphones, pharmaceuticals and automobiles, employing over 40,000 people and generating revenues equivalent to 2 percent of the national GDP.

On July 13, VinFast, the automotive division of Vingroup, announced that it will raise at least $4 billion for its first electric vehicle plant in North Carolina. The project made headlines when it was announced earlier this year when it bucked global trends when a Vietnamese company opened a factory in the US

Vuong, the country’s richest man with a net worth of $5.77 billion, runs the ever-growing conglomerate treasured by the government. Le Hong Hiep, a senior fellow specializing in Vietnamese studies at the ISEAS Yusof Ishak Institute, said the group enjoys “more protection from the government” because of its economic importance to Vietnam.

“If the rumor is about a small company or a minor business person, the government doesn’t care,” he told VICE World News. “But since the group is the largest private conglomerate in Vietnam, if anything happens to the group, it won’t just be Vingroup. The national economy will suffer as a result.”

“Because of Vingroup’s importance to the national economy, I think the government has good reason to intervene, especially when the information is incorrect.”

This is not the first time members of the public have been targeted by authorities for their comments about VinGroup. Last year, Facebook users had their accounts suspended after posting bad reviews about VinFast’s cars, while a VinFast YouTuber was reported to the police after he pointed out problems with the company’s cars.

In 2018, local pro-democracy activist Nguyen Anh Tuan said he was stopped at the airport after returning from a trip abroad, held for 15 hours and ordered to delete Facebook posts raising questions about Vingroup’s land acquisition processes. In 2019, real estate investors complaining about Vingroup’s delayed real estate development were contacted by police and warned not to speak to journalists or post on social media financial times reported.

Phil Robertson, deputy Asia director at Human Rights Watch, told VICE World News that Vingroup’s isolation from criticism was “a mockery of official claims to uphold the rule of law.”

“Just as Vietnam criminalizes any criticism of the government or its officials, it also criminalizes those who dare to denounce the misdeeds of state-affiliated companies like Vingroup,” he said. “Such impunity allows Vingroup to ruthlessly disregard the rights of ordinary people affected by the company’s operations or projects.”

Rumors of Vuong’s travel ban are not entirely unfounded as Vietnamese authorities have cracked down on the country’s one percent population. There was much speculation this month that the 53-year-old would be the next target in a string of high-profile arrests of the country’s wealthiest as Vietnam’s Communist Party, led by Secretary-General Nguyen Phu Trong, continues its crackdown on corruption since 2016.

In many of these cases, businessmen were banned from leaving the country during investigations.

In March, rumors circulated that the government had imposed a travel ban on Trinh Van Quyet, another Vietnamese billionaire with real estate development assets whose share price similarly plummeted on investor concerns. On March 29, just a day after the Department of Public Security denied rumors of his arrest, Quyet was arrested on charges of market manipulation.

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