Lavenue Investment JSC, which had planned to build a five-star hotel and shopping mall on a 4,896-square-meter (5,856-square-yard) plot of land on Le Duan Street in District 1, has sought his intervention to allow it to resume construction.
The development ground to a halt after the Government Inspectorate concluded last May that the city People’s Committee had sold the land to private firms against regulations, causing a loss of trillions of dong (VND23,250 = $1) to the treasury and urged the city to appropriate the land.
Lavenue general director Do Minh Quan said in his letter to PM Nguyen Xuan Phuc” “[The inspectors] cannot request to have the land repossessed because of the city leaders’ mistake. If the leaders committed mistakes then it was partially due to budgetary pressures during the economic crisis, they did not get any [personal] benefit from approving our project.”
According to Quan, Lavenue did not commit any violation, the land use fee it had paid was twice the market rate at a time when the property market was frozen.
Besides, the company had spent VND1.5 trillion ($64.5 million) on the project, including VND624 billion ($26.84 million) in land use fee, VND23 billion ($989,400) in land rental to the city, VND148 billion ($6.36 million) to hire foreign consultants, and VND687 billion ($29.57) million) on loan interest.
“If the project stalls, the company will go bankrupt and our employees will be jobless. We will have to file a lawsuit against the HCMC People’s Committee in court and seek international arbitration to safeguard our rights and discharge our responsibilities toward shareholders.”
Speaking to VnExpress earlier this month the city People’s Committee had said it would take disciplinary actions against all individuals and organizations involved in the sale of the plot of land, and the Department of Natural Resources and Environment would repossess and reauction it.
The land is located at the intersection of Le Duan and Hai Ba Trung streets in downtown Saigon and virtually behind the Notre Dame Cathedral.
Before 2007 the Ho Chi Minh City Housing Management and Trading Company managed it and rented it out to four companies belonging to the Ministry of Industry and Trade.
In 2007 city authorities announced plans to build a five-star hotel and shopping mall at the site.
The city was supposed to identify a reputable, experienced investor in the hotel sector through a public auction.
At the Ministry of Industry and Trade’s request, the city authorities agreed in 2010 to establish Lavenue Investment JSC to manage the task, with the HCMC Housing Management and Trading Company owning a 50 percent stake in it and the ministry’s four companies each having a 12.5 percent stake.
Two months later 80 percent of the new company’s shares were sold to private firms, including the 50 percent held by the ministry’s firms for a profit of VND50 billion ($2.13 million) each for the four.
In 2011 Lavenue received the city’s approval to build a complex comprising a high-end hotel, retail outlets and rental apartments. But construction has yet to begin and currently the land is being used as a parking lot.
At the time of the approval the city’s Department of Finance asked Lavenue to pay nearly VND177 million ($7,616) per square meter to buy 3,433 square meters and VND3.53 million ($150) per square meter per year to rent the remaining 1,463 sq.m.
But the Government Inspectorate said since the current market price of the land is over VND400 million ($17,211) per square meter, the city could get over VND2 trillion ($86.06 million) by auctioning it afresh.
The inspectors also concluded that the People’s Committee, including former Vice Chairman Nguyen Thanh Tai, several departments, and the HCMC Housing Management and Trading Company had deliberately violated state regulations and merited severe punishment.
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