National Assembly's Investigation of Vietnam's Irrigation and Flood Protection Project Completed
by Tran Thi Thuy Linh
30-1-2001
A special investigations committee struck by Vietnam's National Assembly in 1999 by the end of January 2001 had completed the investigation of the economic irregularities and mismanagment of the Asian Development Bank-financed Irrigation and Flood Protection Rehabilitation Project. It found that considerable conspiracies and other illegal schemes were set up by officials of the Ministry of Agriculture and Rural Development, the Central Project Office of the MARD, and provincial Sub-Project Offices. The elaborate schemes resulted in significant amounts of the project's funds to be diverted by corrupt officials. This resulted in substandard implementation of the project and substandard quality rehabilitated water resources infrastructure. The committee recommended that a special prosecution office be established to further investigate the economic and management irregularities and to bring to trial those who had conspired to steal the nation's wealth, therefore damaging the people's trust in the government.
Vietnam's Bai Thuong Dam Project Completed
Vietnam effectively completed the reconstruction of the Bai Thuong Dam in Thanh Hoa Province with the official completion of the works January 2001 following an official settlement of outstanding construction issues in the early part of the month. The project was rife with irregularities which resulted in economic and technical mismanagement. Hence the investigations into the irregularities by a Special Investigations Committee of the National Assembly of the overall Irrigation and Flood Protection Rehabilitation continued, although the project was essentially completed save final reporting to the Asian Development Bank.
The Bai Thuong Dam on the Chu River was originally built by the French and completed on January 10, 1926. It was the first major irrigation project in central Vietnam during the French colonial period. Over the years it fell into disrepair, especially during the Vietnam War when United States military forces bombed it and otherwise tried to damage the structure so that water would not be available to irrigate rice, cause food losses and attempt to starve the local population.
The work on the Bai Thuong Dam was carried out as part of the Asian Development Bank-financed Irrigation and Flood Protection Rehabilitation Project which also involved the first international contracts for Vietnam's Ministry of Agriculture and Rural Development (MARD). The project, however, was not without its problems, intrigues and behind-the-scenes activities involving irregular practices and less-than-optimum management practices. A number of illegal schemes and conspiracies were uncovered in the project's management that merited further investigation of corruption in the project.
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The original Bai Thuong Dam before reconstruction |
Vietnam's National Assembly decided that a special committee should be enacted to investigate the irregular practices and corruption related to this project. Although the investigations were not yet fully completed as of the end of January 2001 there was sufficient evidence to indicate that funds were diverted, various bodies under the MARD were involved in schemes that in effect created conflict of interest and questionable practices in the selection of contractors and which indicated that bribes were paid for favourable consideration.
The project and the selection of contractors for the first Asian Development Bank (ADB) and international bidding contracts for Vietnam's MARD paved the way for urgently needed rehabilitation of one flood protection project in Hanoi and two irrigation projects in Nghe An and Thanh Hoa provinces to the south of Hanoi, and some of the country's most important water resources infrastructure, and for the introduction of new technologies to the country.
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The MARD chose a consortium of international consultants made up of Experco Ltd. (Drummondville, Quebec, Canada) as the prime consultant, together with ECI (Denver, Colorado, United States) and Klohn-Crippen Consultants (Vancouver, British Columbia, Canada) [hereinafter refered to as the Consortium] to provide engineering services for design and construction management for the rehabilitation of the Bai Thuong Dam and headworks and a number of contracts for the Hanoi Dyke protection. The international team provided engineering services for project management, project design and procurement of construction services. The investigations by the NA special committee revealed that the prime consultant was able to win the project through payment of a 'pre-investment' for consideration for selection as the winning proponent. Furthermore, there some indication that the prime consultant probably conspired with senior officials of the MARD's Central Project Office (CPO) to set up the project to facilitate the use of CPO-controlled parastatal bodies to carry out various components of the engineering works and construction management, in effect creating a conflict of interest which is against the rules of the ADB for use of sub-contractors in ADB-financed projects and against the rules and laws of Vietnam. Hence the investigation. This improper activity was done through a Viet Kieu who had immigrated to Canada and had become a Canadian citizen and had been retained by the consultant as its employee. The committee was unable to question this Viet Kieu because he passed had away in Canada. |
Project components
The Irrigation and Flood Protection Rehabilitation Project project consisted of three sub-projects:
- Hanoi Dyke Rehabilitation Sub-project under the management of the SPO No. 401;
- Song Chu Irrigation Rehabilitation Sub-project in Thanh Hoa Province, which included the reconstruction of the Bai Thuong Dam under the management of the SPO No. 406; and
- North Nghe An Irrigation Sub-project in Nghe An Province under the management of the SPO No. 407.
All three sub-projects were coordinated by the CPO, a project management unit of the MARD. The condition of this infrastructure was critical and presented serious risks of failure, in spite of some initial small repair works carried out by local contractors.
The Hanoi Dyke is part of 3,000 km of dykes constructed in the Red River delta region dating back some 1,000 years. It was recognized that failure of the Hanoi Dyke would have had a devastating impact on lives, properties, economic structures and the environment in and around Hanoi City. Overtopping or breaching of the existing dyke in the past resulted in thousands of lives being lost. Rehabilitation of the Hanoi Dyke improved the protection against floods in a 42,000 ha area that included Hanoi City and parts of Ha Tay province. It increased the security of 1.75 million people.
Around 1922 the French constructed the two irrigation systems in Thanh Hoa and Nghe An provinces. They were in various states of disrepair because of a lack of maintenance and damage received during the wars of independence over the previous 50 years, particularly at the hands of the Americans who bombed the systems in an attempt to create famines by destroying the irrigation systems which provided water for the crops, the harvests of which feed the Vietnamese.
Strategically these are very important water resources structures for north Vietnam. Failure of these two irrigation systems, which are among the largest in north Vietnam, would have had a disastrous impact on the agriculture, environment and populations living in the command areas. Rehabilitation of the two irrigation systems helped to stabilize and increase the irrigation water supply for 80,000 ha of cultivated land.
Hanoi Dyke Rehabilitation Sub-Project
The Hanoi Dyke Rehabilitation Sub-Project comprised of the repair and stabilizzation of 45 km of earth dykes along the right bank of the Red River upstream of Hanoi City, through and downstream of Hanoi past Thanh Tri and into Ha Tay Province.
The dyke system has been built up by Hanoians for at least around 1,000 years; in 2000 Hanoi celebrated the 990th anniversary of its founding. Started as separate small, farmer-built dyking efforts, enlargement and heightening of the dykes with each successively larger flood took place over the intervening years until a large, well-established dyke system protects Hanoi and its environs. The dykes were built directly on the original thick alluvial deposits and the fill material is heterogeneous and, in many cases, not ever properly stabilized. There was no drainage or seepage control.
Large sediment loads in the Red River, brought from far upstream where flow velocities were higher ensured that in its lower reaches the Red River did not need to increase its sediment load, especially as velocities were reduced as the river approached the sea. This generated natural levees and large bars in the river.
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However, the construction of a large hydro-electric dam project several years previously on a major tributary of the Red River significantly reduced the amount of sediment reaching the downstream reaches of the Red River. Consequently, to maintain its natural sediment load, the river began to erode its banks. Hence, after nearly 1,000 years of surviving whatever the Red River threw at it, the dykes began to suffer from river bank erosion some time after the hydroelectric project was completed. The erosion threatened the dyke itself. |
Furthermore, there was erosion of the dyke embankment by piping, shallow slips, cracks, and termite and ant nest holes; poor foundation conditions because of weak and permeable layers that resulted in piping, boiling sands and settlement. Human activity on the dyke and its vicinity, although made illegal in order to protect the dyke system, nevertheless occurs surreptitiously because of corrupt government officers and authorities turning a blind eye. These illegal activities comprise building construction activities, traffic and industry.
The rehabilitation measures were carried out at Thanh Tri, Lien Tri, Ba Giang and Phu Gia and along other stretches of the dyke. The work was to have been completed by the end of June 1999, however because of poor management by the CPO, corruption and financial irregularities associated with the project, there were considerable delays. A second installment of work was authorized in September 1999 to be completed by April 2000. However, further delays meant that by the end of 2000 the work still was incomplete, particularly the installation of relief wells.
The Hanoi Dyke rehabilitation works comprised:
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- construction of river bank protection structures and revetments
for a dyke length of nearly 9 km;
- rehabilitation of the dyke structure, including enlargement or heightening along 36 km of dyke and dyke strcture improvement down to about 10 m below low water surface by various techniques including grouting for conditions such as high permeability, piping, cracks or potential erosion; and - construction of stabilization structures for the dyke foundations, such as river and land side blankets - relief wells introduced for the first time in Viet Nam, drainage and partial cut-off walls to reduce pressure inside the dyke body to increase its stability. |
The scope of the work covered a 61 km stretch of the dyke protecting Hanoi and Ha Tay Province from flooding by the Red River. The Hanoi Dyke extension work from km 85 to km 101 covered sediment transportation analyses, designs for the strengthening of the dyke, the direction of technicians and the monitoring team for the two subprojects during construction and the evaluation of the monitoring data for Hanoi Dyke safety.
During the rehabilitation work of the Hanoi Dykes the Asian Development Bank went to view the work from time to time and expressed some concerns regarding the quality of the work. They wrote directly to the consultant regarding their concerns, however it also expressed its concerns to the CPO.
A number of detailed inspections of the three dyke rehabilitation projects at Lien Tri, Phu Gia, and Thanh Tri were carried out by the ADB, in some instances without the prior knowledge of the CPO using project officers associated with other in-country ADB projects. There was considerable concern with respect to the quality of the masonry pavement and rip rap infill on the wet side of the dykes that had been constructed to protect the slope of the dyke from erosion. In numerous instances the contractor had constructed the masonry structures such that the outside was a shell of relatively good masonry with an interior just made of loose stones and slightly cementitious sand. Moreover, a good deal of the mortar had hardly any cement in it; it was almost pure sand. This plus little curing in the hot sun so that there was incomplete hydration of whatever cement resulted in weak structures lacking durability. This was a problem that could have been solved with better supervision on the part of CPO engineers, if they had cared. Rock gabions were often discovered to be made of inferior quality wire and there was a strong avoidance, by instruction from the CPO and the SPO No. 401, to use the specified geotextile.
Hanoi Dyke Relief Wells
The Hanoi Dyke subproject also had an item of work foundation treatment by using a relief well system. In accordance with the approved plan, some parts of the Hanoi Dyke foundation were treated by the relief wells system. This project feature was separated into 3 stages: Trial stage (implemented in 1996), stage 1 (implemented in 1997), and stage 2 (implemented in 1999 and into 2000 after lengthy bureaucratic delays).
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The relief wells technique (deep tube wells) was new to Vietnam at the start of the project as a method to treat the dyke foundation to increase the stability of the overall dyke. Because it was a new technique, contractors encountered problems during installation of relief wells in two first stages. There were other reasons for the problems due to nepotism, cronyism and collusion. Relief wells were drilled and installed near the toe of the landside of the dyke to drain water in the flood season, to reduce the pore pressure in the foundation and the landside, to monitor the seepage, to prevent the ground-erosion and piping that reduced the dyke's stability. |
There were two kinds of relief wells: the first type was shallow wells to drain water above seepage level and these wells were constructed by ordinary excavation. The second one involved deep deep tube wells that penetrated the phreatic surface. These wells were constructed by drilling as tube wells.
Relief wells installation procedure was to include the following steps:
(1) Drilling and logging to define geologic conditions;
(2) installation of well screen and connection;
(3) filling primary and secondary filter pack;
(4) cement-bentonite slurry;
(5) installation of drainage system together with collector pipe from the well system to the ponds and lakes; and finally
(6) installation of the protection casing and piping system.
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There were considerable problems in installing the deep tube relief wells because of political issues emanating from within the CPO management. Many of the members of the CPO management did not accept using such innovative methods, as is consistent with the Vietnamese older generations' conservatism. Hence bureaucratic hurdles were invented by these people in an attempt to prove that this method was not practicably feasible. Consequently, there was an 18-month period of trial and tribulation for the senior engineer from the Hydraulic Engineering Company No. 1 who was entrusted with the responsibility of acting as Project Manager for the implementation of this part of the Hanoi Dyke Rehabilitation Subproject. However, with preserverenace he was only somewhat successful. |
As early as February 1997 problems associated with the installation of the relief wells appeared. After officials from the CPO, the SPO No. 401, and the DDMFC carried out field trips to review the sites where the relief wells were to be installed for the Hanoi Dyke Foundation Treatment Project, the arrangement concerning the number of wells that was discussed during the field visit was reviewed by HEC-1 and the international consultant. It was understood that the number of relief wells was reduced from 142 wells to 96 wells which was not in accordance with the original design. Moreover, there was a delay in the commencement of the project to install these wells.
The reduction of relief wells and the delay of construction before the 1997 flood season had a detrimental effect on the success of the project for the following reasons:
- The design of the location and number of wells was based on boundary conditions established from previous research concerning the conditions of the Hanoi Dyke foundations. For given boundary conditions there were many combinations of well spacing and penetration, however there was an appropriate configuration for given site conditions. The final selection of spacing and penetration should have been based on the monitoring of subsurface conditions at a number of sites along the dyke. This data was not adequate. Therefore the work was separated into two stages with the first stage being the most critical as the data obtained from this stage was to be used to determine the final configuration to ensure a successful implementation of the project at the completion of the second stage. It was determined from the research that the number of relief wells in the first stage could not be less than 142 wells. One cannot arbitrarily decide to reduce the number without proper technical investigation. The designers (HEC-1) felt that the number could not be reduced as this had not been properly analysed and modeled, although the CPO arbitrarily changed the configuration without a good deal of thought. Therefore HEC-1 attempted to informed the CPO that if the number of wells was less than those in the design, those who prepared the design could not be held responsible for the success of the foundation treatment. HEC-1 felt that with a smaller number of relief wells the spacing could not be less than 30 m, and perhaps the penetration of the wells should have been deeper.
- The well installation was implemented in two stages. The first stage was to be carried out in the 1997 dry season, and the second stage in the 1998 dry season. The data obtained from the monitoring of the wells installed during the first stage was to be used to determine the location, number, and depth of the relief wells to be installed in 1998. The quality of this data was to be determined by how the foundation system responded to the installation of the Stage 1 wells. It was for this reason that the 319 wells that had been planned were to be installed in two stages. Therefore if the contractors could not carry out all of Stage 1 before the 1997 flood, HEC-1 felt that the CPO should allow that some more man-months after the 1997 flood to carry out a new design for the foundation treatment. This new design, to be carried out during the 1988 dry season, was to incorporate a greater number of relief wells, and spacing and penetrations that were different from those originally intended. It was noted to the CPO that this would result in a higher cost for the work than that resulting from the October 1996 design. All the wells had be installed by the end of the 1998 dry season in order to meet the agreement made with the Asian Development Bank.
- The whole of the implementaiton of the relief well program was a major problem. The investigation revealed that the contractors that were retained to install the wells had crony relations with senior members of the CPO, and colluded with CPO and Construction Department officials to carry out the work in a manner that was deemed unsatisfactory. Although they lacked sufficient experience to carry out the work effectively, they nevertheless were allowed to continue. The wells were not installed properly and the data obtained after the wells were tested showed that the efficiency of the wells was quite poor and that the desired results, that is, increase the stability of the Hanoi Dyke was unachievable under these conditions. The HEC-1 was pressured to fabricate good results because the CPO wanted to hide the poor results from the ADB.
Changes were also demanded of HEC-1 and the Consortium found these were unacceptable. This created some embarrassment at the CPO such that as a form of penalty they denied the international expert renewal of a visa to return to make good the problems.
The design work called for the wells to be installed from barges on the water. However, the CPO and the Construction Department, in collusion with the crony contractors, opted for the construction of a large berm in areas where water was ponded on the land side of the dyke, such as the Tay Ho Lake. The wells were installed from the berm. The reason for this approach was that it permitted large sums of money for the berm construction to be diverted. The investigations committee resolved to identify to whom these illegal payments were made as the berm constructors were cronies of the CPO and the SPO No. 401 management.
Many of the wells do not produce as intended because they were impropoerly installed by the cronies of the senior CPO officials. Hence, the difficulty arose in forcing to have new wells to be installed because they did not want the cronies (friends and/or family members) to lose money. The CPO decided to deal with this problem by fabricating well production data wherever possible. One query raised by the investigation committee was why the CPO, as the Employer, sided with the contractors. This seemed to be a conflict of interest and not in the best interests of the Vietnamese people.
Seven prequalified contractors submitted a number of bids through local competitive bidding (LCB) for the hanoi Dyke rehabilitation. Later work was tendered through International Competitive Bidding (ICB). A host of irregularities in the bidding process and contracts administration, investigated by the special committee mandated by the National Assembly, resulted in poor quality construction, materials of an inferior quality than specified, and in some cases certain members of the CPO collaborated with the Vietnamese contractors to modify the contract specifications after contracts were awarded to eliminate or reduce the use of certain specified materials such as geotextile or PVC-coated wire for the rock gabions used for bank and river bed protection. Masonry for the river-side lining was low in cement content and poorly cured during hardening resulting in failure of the structures. The poor work resulted in the ADB sending a special team to investigate the situation in early May 1997 and the team reported an expression of serious concern regarding the quality of the work.
Song Chu Irrigation System Rehabilitation Sub-Project
The Song Chu Irrigation Rehabilitation Sub-Project is located in Thanh Hoa Province. The capital of the province, Thanh Hoa City, is located 152 km south of Hanoi. The Song Chu irrigation system extends from Thanh Hoa city upstream to the Bai Thuong Dam, some 55 km to the west of Thanh Hoa City, and from which the water for the system is diverted from the Song Chu River. The work to rehabilitate the irrigation system and the Bai Thuong Dam was completed in late 2000 at a cost of US$20 million.
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The sub-project covers a gross area of 720 km2 in five districts of Thanh Hoa Province. This irrigation system is the largest in the Ma River Delta and its original design was to irrigate 50,000 ha. The Song Chu is a major tributary of the Ma River. Both rivers originate well inside Laos, to the west of the province. Thanh Hoa City has a population of about 200,000 people. The domestic water supply for the city comes from the North Canal on the system. The water in the Song Chu Irrigation Sub-project is mainly driven by gravity through a network consisting of a main canal, two secondary canals and numerous tertiary and quaternary canal networks. |
In some areas, energy is provided to the system by pumping. Prior to rehabilitation, the actual capacity of the system during the dry season was only 30,000 ha because the components of the irrigation systems had deteriorated and because of an increased demand for water for non-agricultural purposes.
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The main works of the system comprises the Bai Thuong Dam and canal headworks built across the Song Chu. They were designed to divert 40 m3/s for irrigation. The spillway section of the dam is 17.4 m high and 175 m long. There is a scouring sluice 23 m high and 22.5 m wide and the canal headworks structure is 29.5 m high by 15 m long. These structures were made of masonry stones on the surface with a rubble concrete core. A retaining wall 24 m high by 35.5 m long connects the scouring sluice and the irrigation system intake headworks structure.
 Another view of the original intake headworks structure |
The headworks structure contained seven inlet gates and one lock gate and structure to allow small vessels and rafts to pass to and from the Song Chu into the main canal. The rehabilitated main canal intake headworks structure retained these features and after improvement also included seven remotely operated gates. Previously, the gates were largely not functioning and, furthermore, had to be operated by teams of men using manual labour to push against long pikes.
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The structures were still relatively stable and functional, however some parts had sustained damage because of bombing by the Americans during the American War. Others such as the scouring sluice were out of operation and had not operated for more than 20 years prior to the rehabilitation of the works. All of the mechanical parts of the gates were obsolete or partially functional.
 Reconstructing the irrigation system intake headworks structure |
The foundation of the main body of the dam had seriously eroded because of a lack of an effective energy dissipator at the downstream toe. The dam and headworks foundations were highly fractured and a layer of loose material existed between the dam concrete and the foundation rock thereby resulting in severe seepage under the dam. It was determined during the design investigations carried out by Hydraulic Engineering Company No. 1, together with the international engineering consultant consortium that the stability of the dam and the headworks structures was critical during floods and uncertain for seismic events. |
The major regulators of the Song Chu Irrigation Sub-Project's main canals and generally all the other infrastructure inside the system needed rehabilitation of mechanical parts and strengthening of the foundations and concrete structures. The main canals total 110 km in length and are in earth cut or filled and were generally unlined. The canals had eroded both in depth and width and could not ensure sufficient discharge to meet the demand of water.
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Prior to the occurrence of irregularities in the administration of the project the proposed rehabilitation measures of the Bai Thuong Dam comprised construction of a slurry trench and reinforced concrete diaphragm wall against the upstream side of the existing dam to cut off seepage and, in effect, to act as an upsream coffer dam during the period when downstream work was carried out. A roller-compacted concrete stepped buttress against the downstream face of the dam was to be built, in effect embedding the old dam structure inside the new concrete. Furthermore, a new reinforced concrete energy dissipator at the toe of the dam, complete demolition and reconstruction of the canal headworks, rock fill and rip-rap and new mechanical and electrical equipment for 10 gates made up the remaining work. |
Temporary works included coffer dams, some steel sheet piling, construction of the contractor's camp and Vietnamese governnent's construction engineering and administration camp on the right bank, and facilities for storing equipment, mixing and pumping slurry and a concrete batch plant on the promontory overlooking the left bank of the Song Chu.
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The area on the right bank between the river and the main canal served as storage for cement, aggregates, workshops and a second concrete batch plant. This was to be the first use of roller-compacted concrete in Vietnam, however it was not to be as the situation surrounding the administration of the contract became clouded and mired in a lack of transparency, corrupt activities and bureaucratic complications that created serious difficulties for the contractor. Rehabilitation of the the main hydraulic control structures and pumping stations comprised repairing or complete reconstruction of mass concrete, foundations and mechanical infrastructure for the major systems of the Song Chu Irrigation System. |
The main and secondary canals were resectioned and lined with large tiles made of precast concrete. Other associated structures included 30 water intakes to secondary canals and 1,180 farm intakes.
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Construction of the new Bai Thuong Dam suffered from considerable conflicts of interest, corrupt management practices and economic mismanagement on the part of the SPO No. 406. As a result, the director of the SPO No. 406 was arrested and charged with economic mismanagement. Nguyen Van Chuong was also relieved of his directorship. Other engineers in the sub-project office were also investigated and charged. The rebuilt Bai Thuong Dam, located at Xuan Bai Commune, Tho Xuan District in Thanh Hoa Province was subject to warranty procedures after numerous cracks were discovered in the body of the structure. |
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In the middle of November 2000, the contractor, the China International Water & Electric Corporation (CWE) was recalled to Thanh Hoa to review the problems at the dam and discuss how to make good repairs under the one-year warranty period. The problems arose because the project was fraught with considerable problems arising out of improper and questionable procedures in the management of the project by the Thanh Hoa Sub-Project Office No. 406.
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Considerable problems arose in the project which has been attributed by the special investigations committee of the National Assembly to be the result of economic improprieties, mismanagement, management irregularities, conflict of interest and arbitrary administrative procedures imposed on the CWE which resulted in economic losses. The former director of the SPO No. 406, Nguyen Van Chuong, was arrested and although since released, was still being subjected to questioning and further investigation to resolve the matter. As designed by the international consortium of consultants (Experco, ECI, and Klohn-Crippen Consultants), the dam was to have been built using roller-compacted concrete (RCC). However, the former director of the SPO No. 406 and some of the office's engineers conspired to have this changed to lean concrete, ostensibly to save money on the works, but the investigations revealed the contractor was forced to charge the same as for the RCC and the difference was then used to pay for "goods and services" to be provided by the SPO No. 406 as a matter of conflict of interest. Many of the details of this issue were not informed to the consortium's engineer at Hanoi. |
The SPO No. 406 acted as the representative for the Ministry of Agriculture and Rural Development in managing the construction of the dam. However, evidence uncovered by the National Assembly's special committee investigating corruption on the project uncovered that the SPO's director (Mr. Nguyen Van Chuong), his deputy (Mr. Minh Ngoc Tran) and other senior staff carried out illegal activities in conjunction with managing the project's finances, they were in conflict of interest when they forced the prime contractor, the China International Water and Electric Corp. (CWE) to hire the SPO and other companies owned by friends and relatives of the Mr. Chuong, as sub-consultants and providers of goods and services to the project. This is strictly against Vietnam's law pertaining to conflicts of interest, graft and corruption.
The investigations also revealed that because of these activities the state and the people of Vietnam lost close to $1 million and, furthermore, quality of construction was compromised owing to changes ordered by Mr. Chuong with respect to the type of concrete used and how some of the work was to be carried out. This resulted in cracks forming in the dam, some of which were determined by a private engineering consulting firm to possibly compromise the safety of the structure. Further studies were planned to be carried out on the dam as part of a future ADB technical assistance.
The investigations into this scandal continued. The Thanh Hoa province's prosecutor indicated that when the case would be brought to trial he would seek the highest penalty possible for Mr. Chuong. The investigation revealed Mr. Minh was forced to act under Mr. Chuong's orders, but he should have known better and reported his superior's illegal activities to the proper authorities much sooner.
As the construction neared completion, cracks appeared on the dam. The Ministry of Agriculture and Rural Development (MARD), which was the project's executing agency, had its Central Project Office (CPO) determine the cause of the cracks and it hired the Hydraulic Engineering Company No 1 to investigate this matter. The investigations raised concern about the dam's safety because numerous cracks, although very, very fine and for the most part less than one millimetre wide were observed also on the upstream side. Modelling of the upstream cracks at full hydrostatic pressure revealed that those near the base of the dam, which were the worse, could result in sufficiently high pressures to develop to force the crack to propagate, an not uncommon matter to consider in a gravity dam without internal drain structures subjected to these uplift pressures.
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Consequently, the CPO, together with some HEC engineers who included the director, Mr. Tu Quan, considered that the cracks should be deemed a possible safety hazard. The cause of the cracks was also analyzed. Contrary to recommendations made to the CPO and the SPO by the consortium of international consultants in April 1997, it was decided to continue to use locally manufactured concrete despite the danger of alkali silica reaction (ASR) between the aggregate and cement. Several tests carried out by the Canadian engineer, who was the project leader, together with two engineers of the CWE revealed that ASR could be an issue and it was reported in a memorandum from the Consortium to the CPO/SPO on May 5, 1997. |
In the memorandum it was recommended that local Bim Son or Nghi Son cement should not be used because it would likely result in excessive expansive reactions which could lead to cracking of the concrete and distortion of metal embedments such as gate guides, etc. Mr. Dinh Vu Bao, deputy director of the CPO, concurred with this possible outcome and indicated that cement from other sources must be used, perhaps even by importing cement from Indonesia, as was suggested by the Canadian engineer. However, his decision was overruled by both Mr. Chuong, the former SPO director, who had interests in using locally made cement, and Mr. Ngo Xuan Loc, CPV CC member and former Deputy Prime Minister who had an illegal concern in cornering Vietnam's cement market from 1997 to 1999.
 The main body of the completed Bai Thuong Dam at Xuan Bai, Thanh Hoa |
Because of this scandal, Loc was subsequently removed from his post by the National Assembly at its sitting in December 1999 and disciplined. Investigations into Mr. Chuong continued. The Director of the CPO, Le Van Hien, was forced into early retirement because of the scandal. Because of the senior people involved in this scandal, Mr. Bao and others were instructed to never mention the problem of ASR in connection with the construction of the Bai Thuong Dam. Mr. Bao considered this improper and attempted four times to bring it up and have it resolved, however he was not powerful enough and ended up losing his opportunity to be promoted to CPO director. |
In late 1999, Vietnam's National Assembly relieved Ngo Xuan Loc from his post as Deputy Prime Minister for his transgressions and venal behaviour related to the Asian Development Bank-financed Irrigation and Flood Protection Rehabilitation Project and having accepted pre-investment payments from the prime international consultant attached to the project in consideration of selection. The plenum further proposed that pending on the results of the findings after the completion of the investigations in the case, those responsible be held fully accountable.
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No fault was found with the Canadian and American partner firms. Poor management and irregular practices by the Central Project Office of the Ministry of Agriculture and Rural Development, and particularly by the SPO No. 401, resulted in substandard quality in the construction work on the Hanoi Dykes, problems with relief wells for the dykes, poor construction in the rehabilitation of the North Nghe An and Song Chu irrigation schemes, and improper construction of the rehabilitated Bai Thuong Dam by forcing the Chinese contractor to construct the dam with lean concrete instead of roller compacted concrete as specified by the American design consultant on the project. |
The project caused massive losses for the contractor because of the inferior project management of the CPO and SPO, insisting on complicated and in some cases illegal bureaucratic procedures, and conflict of interest by insisting in the hiring of its own construction companies and offices as subcontractors to the prime contractor for the reconstruction of the dam.
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Further investigations using ultrasound techniques revealed that reinforcement steel embedments and splice-laps in many places within the dam's structures were insufficient. The CWE indicated that this work was carried out in this manner under the instructions from the SPO. Such revelations led to the Special Investigations Committee to scrutiny the management of the Bai Thuong Dam construction. Furthermore, it was revealed that the SPO instructed that because the administrative bureaucracy had put the project so far behind schedule they wanted the CWE to speed up the rate of placing concrete. This required that to place the large quantities of concrete quickly, set-retarding admixture be used so that the larger batches could be properly placed before setting. This contributed to accelerated slump loss and many of the slump tests revealed a slump of only 14 cm or less, which, according to the Vice Director of the Technical Department of the CPO, was considered to be not suitable for the 28-day strength of concrete used (about 29 MPa). To make the concrete look nice it was worked hard, but given the early loss of slump and workability, it required overworking after real set of the concrete had started, thus resulting in some cracking as could be viewed on the downstream side of the dam. |
The MARD, after some meetings on the matter with certain members of the National Assembly and engineering professors at the Ha Noi University of Technology, and the Vice-Director of Technical Department of the MARD, decided that the cracks must be sealed to prevent possible future problems. To address this matter, the CPO and the SPO No. 406 sent a delegation lead by the CPO Deputy Director Dinh Vu Bao, to the CWE's offices in Beijing in June 2000.
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The mission consisted of two members of the CPO and two members of the SPO which included Mr Duong Tien Chung, Deputy Director of the SPO No. 406. It was agreed that the CWE should repair the dam under the warranty procedures allowed for under the FIDIC contract. At the meeting in Beijing, the CWE suggested that the cracks could be repaired using an epoxy grout. However, some cracks are so fine that suppliers of epoxy grout were not sure that the grout could be injected effectively. The CWE agreed to send their contracts specialist back to Thanh Hoa to try to resolve the matter. |
On November 21, 2000 Mr. Wang Xiaobing, the contracts specialist engineer who administered the Bai Thuong Dam construction contract for the CWE, together with Ms Phan Dong, the CWE's interpreter engineer, went to Thanh Hoa to meet with the high-level Viet Nam government mission which also included two members of the Special Investigation Committee in addition to a HEC engineer, an engineering professor from the Ha Noi University of Technology, the Vice-Director of the Technical Department of the MARD, and senior members of the CPO to discuss this matter with the SPO and visit to resolve the matter.
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In addition to have the CWE repair the cracks, the Special
Investigations Committee would now look further into the matter of the SPO's
management of the project in connection with this problem and add the evidence
to the charges to be applied to the SPO director and his involved cohorts.
Some procedures regarding the Bai Thuong Dam Project were still to be completed by the CWE and these included the official final handing over of the project to the Government of Viet Nam, contracts clearances with the banks and tax bureau and final tax payments. This was accomplished in January 2001. |
 Crossing the Song Chu immediately downstream of the Bai Thuong Dam during high water |
Crossing the Song Chu immediately downstream of the Bai Thuong Dam using the pontoon bridge during low water. The bridge was replaced by a concrete bridge 8 m in width. |
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The Song Chu Irrigation Management Board is in charge of managing the whole irrigation scheme. During construction of the Bai Thuong Dam there were periods when high water made the work difficult or impossible. One way to deal with this would have been to open the gates of the main canal and divert some water down the canal. However, the CWE reported on numerous occasions that the management board refused to cooperate at critical times and this further caused delays to the work and the expensive destruction of the first stage upstream coffer dam during the inital stages of the construction of the diversion channel. Furthemore, the investigations revealed that the management board, as a form of extortion, had demanded illegal payment from the CWE for the release of water from the Bai Thuong reservoir to route the rainy season floods. These extortive practices continued throughout the course of the project, according to the CWE. The CWE was contractually responsible for any consequences arising from failure of the dam, hence it had no choice but to pay to these extortionists.
Despite all the glowing reports by the government officers regarding the rehabilitation of the Song Chu Irrigation system, the discussions by ADB officers with the staff there, as well as subsequent investigations, revealed inconsistencies in reporting and that the work was not completely successful, although for the most part it nevertheless seems to have brought some benefits to some farmers. The farmers were no longer fighting each other and damaging canals to deny water to each other, and cooperation among the farmers improved. Farmers pay for the board to operate and maintain the canal, in itself a normal way to finance this work, however the way the payment process was instituted by officials of the irrigation management company caused some concerns on the part of the ADB as there is the potential for abuse and profit-making at the expense of the farmers.
Considerable work was done to line the main canal, North Canal, and some secondary canals. This work was carried out with 0.5-m square precast concrete plates placed over geotextile. It looked good and it did reduce seepage losses some as well as increase the hydraulic efficiency of the canal system. The plates, however, were relatively light and with higher canal water velocities they were sometimes lifted off and swept downstream, hence a good part of the rehabilitation work was undone.
North Nghe An Irrigation Sub-Project
The North Nghe An Irrigation Sun-Project is located abbout 330 km south of Hanoi in Nghe An Province near the provincial capital of Vinh. This system is the largest in the Ca River delta and it covers a net cultivated area of 30,000 ha and is similar in structure to the Song Chu Irrigation system. The original design of the system was to irrigate 30,000 ha of mainly paddy. However, the actual irrigated area was 21,000 before rehabilitation for an average dry season, with only 18,000 ha in some years. Deterioration of the components of the irrigation systems and the increased need for water for non-agricultural purposes resulted in the reduced capacity of the system.
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The main components of the system are the existing Do Luong radial gate weir consisting of pelican gates that did not functioning and which extends 276 m across the Ca River. The structure and foundation were eroded with mechanical equipment partially damaged or not functioning. A functional but badly silted water intake worked only with regular massive dredging at great cost. The slopes and floor of the 40 km long main canal were generally eroded upstream and it was full of sediment downstream thereby lowering water discharge capacity. |
All the regulators and main infrastructure such as siphons and spillways within the irrigation system needed rehabilitation of the mechanical equipment and strengthening of the foundations and concrete structures. The existing tunnel lining was deteriorated and a new tunnel was constructed to provide greater discharge capacity. The drainage system associated with the North Nghe SAn irrigation system was inefficient.
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The rehabilitation measures consisted of rehabilitation of the Do Luong weir, scouring sluice and headworks including removal of sediment deposits, repair of the mass concrete and downstream foundation, repair and replacement of mechanical equipment and replacement of the scouring sluice gate with a new electrically operate mechanism. The existing 550-m long Tuong Khap tunnel was rebuilt with a wider configuration and provided with a new reinforced concrete liner which required contact grout injection. |
A new 2.5-m diameter parallel tunnel was constructed with a discharge capacity of m3/s. The tunnel works were caried out by a Japanese construction firm working toegther with a Vietnamese state-owned construction company.
The main hydraulic control structures and pumping stations and almost all the other infrastructure of the North Nghe An irrigation system required rehabilitation or complete reconstruction. The main and secondary canals were resectioned and lined with large precast concrete tiles, together with the rehabilitation of associated structures as well as a total of 66 water intakes on secondary and tertiary canals, culverts and farm intakes.
Project Implementation
The Irrigation and Flood Protection Rehabilitation Project was implemented by the Central Project Office (CPO) as the executing agency with the Consortium acting as the Government of Vietnam's technical and engineering consultant. The consultant provided expertise, assistance and technical transfer during the feasibility studies, design, tendering process and construction management and contract administration of the various sub-projects under the IFPR Project.
Less than satisfactory management capabilities as well as irregular practices on the part of the CPO and the three SPOs resulted in the project falling behind schedule, funds being diverted and a cause for concern by both the Government of Vietnam and the ADB. Hence the establishment of a special committee by the government's National Assembly in early 1999 to investigate the irregularities and inefficiencies in the project's management.
The investigations revealed that the services of the prime international consultant were alleged to have been retained through the consideration of 'pre-investments' and other services by the prime consultant to members of the CPO. Furthermore, the committee has alleged in its report to the Prime Minister that an arrangement was made between the CPO and the prime consultant to retain the services and goods provided by members of the CPO to the Consortium in exchange for payments considerably higher than the norm for Vietnam. Furthermore, this was, in effect, a conflict of interest on the part of the CPO as it was acting as both employer and sub-contractor to the consultant.
Findings of the Special Investigation Committee With Respect to Project Administration
The project's administration was fraught with conflicts of interests on the part of the CPO and operations whereby irregular payments for services were required to be made by the Consortium to the CPO and other contractors and subconsultants. In many ways it appeared the Consortium was not really aware of the schemes that had been set and probably was forced into these arrangements. Some of the irregularities were identified by the special investigations committee as follows.
The investigations involve seizure of records and correspondence held by the CPO, the various SPOs involved in the proejct as well as interviews with various involved parties, both within the Ministry of Agriculture and Rural Development and among expatriates hired or otherwise contracted to carry out various components of the Irrigation and Flood Protection Rehabilitation Project.
Bureacracy for the Sake of Consideration
On numerous occasions the contractor for the Bai Thuong Weir and Headworks Rehabilitation Project, the China Water and Electricity Corporation of Beijing, informed the investigations committee it had had difficulties obtaining the necessary permits to begin construction on the project and to import the equipment and materials from China that it required.
The contractor informed that it had made application for an import permit on December 30, 1996, but that for the first few months into the project had not been provided with such permits. Moreover, it reported it had received little cooperation from the Ministry of Construction in obtaining permits to begin construction until considerable unusual and extra-contractual payments were made to this body as well as the MARD's construction department. The contractor reported that extra-legal fees were demanded for the issuance of such permits, fees outside the agreed upon contractual terms. It eventually was required to pay nearly $15,000 to obtain these permits.
Incestuous relations
The investigations committee uncovered that for the Hanoi Dyke bank protection projects at Phu Gia, Lien Tri, and Thanh Tri there was a sort of incestuous relationship between the various contractors, the CPO and the SPO No. 1 as construction materials from the three separate projects were often shifted around among the contractors. Most of the material was placed under deep, murky water of the red River so there was no way for a construction monitor, such as that provided by the Consortium, to know whether it was in fact being put in or the contractors only pretended to do so. The fact that the purchase orders and invoices purported they had bought the materials did not actually prove they did. Again, there was a conflict of interest as often the invoices were found to have been falsified by the purveyors to the contractors.
Double charging for services
The investigation committee discovered that some charges for the same goods and services charged to the project were being paid for by other projects at the same time (the office janitorial services, for example). Being party to the practice of double charging for goods and services is illegal according to the laws of the Socialist Republic of Vietnam. Furthermore, the law states that being unaware of such practices or of such laws, or by accidentally being party to such practices because of ignorance of such practices by other parties who are entered into agreements for payment of goods and services thereunder where such double charging is practiced, is not an excuse or reason for immunity from prosecution arising from charges being laid for such double charging in the due process of the law in accordance to such laws. The consortium of international consultants endeavoured to ensure that no such practices existed in the course of payment for such goods and services to be paid for by the consortium in carrying out any activities required for successful execution of the Irrigation and Flood Protection Rehabilitation Project. The CPO orally stated that this should be so and that it would be a correct and lawful basis for payments to be made henceforth, and that payments made after that agreement, even for charges arising for goods and services provided prior to that day, would be reduced by an amount equal to that where, accidental or otherwise, double charging was noted to have been made for such services and goods provided to the consortium. The agreement called that payments for the following items were not to be made from any funds advanced to the Project Office Manager and he was to be instructed accordingly.
CPO Office Services
As agreed by Mr. Le Van Hien, the former CPO director, and Mr. Dinh Vu Bao their discussions with the project team leader, acting on behalf of the consortium, on February 3, 1997, the services of Construction Management consultant required that he spend at least 80 percent of his time at Bai Thuong to ensure success in the construction management of the Bai Thuong Weir and Headworks Rehabilitation Project. He was to return to Hanoi only to complete the monthly reports and to prepare the monthly invoices. This agreement came about on the apparent request of the CPO and the request of the Thanh Hoa Sub-Project Office No 406 which expressed it required as much assistance as possible from the Consultant to carry out the management of this construction work. As such the CPO agreed that the office services provided to the CPO to the Consultant were no longer required full time and at best would constitute about 20 percent of previous offices services provided by the CPO to the consultant. This agreement was reiterated by Mr. Hien to the Consultant at a meeting on March 13, 1997. On March 13, 1997 the consultant and the CPO therefore agreed that as of March 1, 1997 payment for such office services would equal to one-third of the past usual amount for the Office Manager and the Interpreter. Services for janitorial services were not longer required as these were henceforth to be provided by the ADB-2 Project as of February 6, 1997 and, later, the World Bank Vietnam Rehabilitation Project. Janitorial services for HEC-1 were no longer required after March 31, 1997. Therefore payment by the consortium for janitorial services would henceforth constitute a value equal to nothing. As for reasons of illegal double charging should charges for all or part of these services already be covered by another party, payment by the consultant for the CPO Offices Services was to be reduced by such amount. However, the CPO continued to demand such payment and in effect double charged for the services. The consultant was requested by the ADB to take exception to this extortion, but subsequently he was not permitted by the CPO to return to Vietnam for this project. For diplomatic expediency, the ADB thus decided to pretend this was not a problem.
Payment for Vehicle Rental
Charges for vehicle rental, as originally agreed, were to remain the same with respect to daily charges and charges per kilometre. And as originally agreed such transportation was to be provided only for the use of the consortium and as it saw fit and with prior approval of the consultant, after consultation with CPO, in the course of carrying out successful execution of the Irrigation and Flood Protection Rehabilitation Project. As such it was agreed this should be so and that henceforth charges for vehicle use would be applied only for such use.
However, it was brought to the attention of the consortium and the ADB that apparent distances for which had been charged were regularly greater than actually covered. At one time (at 1020 hours on March 5, 1997 at the Thanh Tri Bank Protection Project) it was noted by the consultant that the driver of the vehicle was in the process of tampering with the vehicle's odometer and was witnessed by a Miss Duong Thanh Tu of the CPO to having advanced the vehicle's odometer by 10,000 kilometers. This practice and the practice of charging for greater distances than actually covered by the vehicle are illegal under the laws of the land of the Social Republic of Vietnam. Therefore the consortium declared to to the CPO that to protect themselves from any prosecution of charges arising out of such practices being carried out, perhaps unbeknownst to the CPO, consortium staff had to resort to separate recording of start and stop readings of the vehicle's odometer when only consortium staff used the vehicle for transport in the course of project activities and the only charges acceptable for payment for distances covered by the vehicle would be those recorded, in witness of CPO staff, by consortium staff. Again, the CPO announced this was a lawful and correct practice. However, this dishonest practice was recorded and reported to have continued.
Per Diems
Per Diems applied to CPO staff providing services directly to the consortium were investigated. As noted, such per diems were to be paid from Project funds as agreed to in the Contract and for CPO staff directly in the services of the consortium. In the past, some per diems were also double charged (illegally according to the laws of the land) for staff not in the direct service of the consortium that had already received the per diem (50,000 VND per day) directly from the CPO for that same outing and day. Henceforth, only staff providing CPO services directly to the consortium when they went in the field overnight to assist in project activities were to be paid a per diem, as originally agreed to. Again, this illegal practice continued and was in effect a mechanism for illegally diverting project funds.
Translation of Documents
Translations of documents were intended to be necessary only where such translations did not already exist and such translations were deemed completely necessary by both CPO and the consortium in order to create a better understanding of the contents of such documents. Moreover, in the spirit of creating a more efficient use of remaining project finances in order to reduce charges against the contingency attached to the project budget, it was agreed that the requirement for such translations of documents would henceforth be approved by both the consortium and the CPO before such translations of documents were to be carried out and paid for from remaining project finances.
Translations of a spurious nature at the highly inflated charge of $5 per page continued and was deemed by the investigations committee to effectively have been an illegal mechanism for the diversion of funds intended for other more useful purposes on the project because much of this translation work was unnecessary.
Payment documents falsified, vehicle distance charges irregularly inflated
The investigation committee reviewed documentation between the Consortium and the CPO, and it came to light that regarding payments for so-called "services" supplied by the CPO to the international consultant were irregular and that in some cases the invoices were irregular and that, in effect, knowingly or unknowingly, the consultant had been asked to authorize falsified documents.
A number of conditions were attached to the contract between the Government of Vietnam and consultant which permitted for conflict of interest and irregular project management activities. For instance, the consortium was not permitted by the CPO to purchase vehicles for its own use. The consortium was forced to "charter" vehicles from the ministry when members of the international consultants had to go in the field. The investigation committee identified this stipulation as an irregular sort of condition because other projects always buy their own vehicles in order not to be held hostage by the whims of officials with a dishonest tendency. The cost of chartering the vehicle was very expensive. For example, early invoices showed that the charge was US$50 per day plus US$0.55 per kilometre. Every time members had to travel to Thanh Hoa, for example, (only 160 km) the project was charged the equivalent of more than the air fare from Hanoi to Bangkok. In the United States, by comparison, an average charge would be around $0.35 per kilometre and usually without any extra daily charge.
The Asian Development Bank, which provided the project financing, did start to ask questions about these issues. Mr. Ken Chee, the ADB's original project officer, on numerous occasions brought this matter up. However, his insistence in trying to deal with the project administration irregularities led to a formal request to be made by the Government of Vietnam to the ADB to have him replaced with Mr. Peter Logan. The investigation committee found a copy of a letter to that effect at the CPO.
The investigation committee requested a review of the veracity of all such project payment documentation. Some of the charges submitted to the international consultant by the CPO were found to definitely be not correct. There was considerable evidence uncovered to indicate there were economic irregularities.
The international consultant, in order to protect itself, kept good track of vehicle mileage because of previous such problems. It added up to hundreds of dollars each month, sometimes thousands. The mileage as recorded by the Vietnamese government drivers was grossly inflated from that which the consultant had personally recorded. One memorandum that was uncovered indicated that one one occasion the international consultant returned back to the vehicle sooner than expected by the officials and from an unexpected direction. The driver was caught with the dashboard dismantled and that he had advanced the odometer by 10,000 km.
An incident was recorded whereby the written documentation of the staffing changes, which were to have resulted in lowering of service charges to the project, were erased from the main project computer apparently on instruction of a Mr. Tran Van Tranh, the project office engineer. The consultant's hard copy in the main project files records mysteriously disappeared, although the erasure on the table of contents was not carried out artfully because other documents with their own numbers were in the file and it was too difficult for the officials to re-number the whole set. This crucial piece of evidence was sufficient to order a release of other files. One of the CPO Deputy Project Directors was required to produce a copy of this documentation. A copy of the aforementioned document was uncovered with a handwritten comment stating he acknowledged the matter of erasure of the files.
CWE forced to illegally hire employer as sub-consultant
The investigation committee discovered that a scheme had been set up by both the CPO and the Thanh Hoa SPO No. 406 whereby the SPO would force the CWE to retain the SPO as a subconsultant for certain goods and services related to the construction of the Bai Thuong Dam. This is clearly illegal and a conflict of interest as the Employer and Engineer were in effect also the sub-consontractor to the contractor.
The SPO would not permit the CWE to write its own subcontracts. As it did not at first know how, the SPO requested the international consultant to prepare such subcontracts, copies of which were forwarded to the investigation committee by the CWE's contracts specialist. Given the circumstances, they were nevertheless rather fair and included the same specifications for that work as were in the prime contract. These specifications were subsequently changed by SPO staff without the knowledge of the consultant. The SPO wrote the subcontracts between the contractor and his subcontractors because by doing so it was to the benefit of the subcontractors, hence the SPO illegally made more money from the racket they had set up. Other subcontractors, such as Thanh Hoa Hydraulic Construction Company No. 1 were discovered to have conspired with the director of the SPO to carry out economic irregularities through the subcontracts that had been prepared by the SPO.
The SPO wrote specifications into the subcontracts that were inferior to those in the prime contract. This way the full amount for the works was paid from funds provided by the Asian Development Bank for the project, but the actual cost was less. When problems arose because of this, the contractor initially was blamed. It was his word against theirs that he did not actually write the subcontracts and he was forced to use them. However, the contractor told the investigation committee that specifically it was a Mr. Dao Trong Tu (Deputy Director of the Department of International Cooperation) and Le Van Hien (formerly the director of the CPO) of the Central Project Office who were running many of these schemes and collusion together with the director of the SPO No. 406, including those where they directly diverted project funds.
The investigation committee wrote in its report to the National Assembly that the SPO was not supposed have written the subcontracts for the contractor because it was a clear conflict of interest. The CPO/SPO entity was the Employer in the prime contract with the prime contractor. Yet the contractor had been told he had no choice but to accept the subcontracts prepared by the SPO to use between the contractor and its subcontractors. In accordance with Vietnam's laws this arrangement was highly irregular and illegal.
The contractor indicated to the investigations committee and even on numerous occasions to the ADB (through Ken Chee) that it was quite concerned because it could not stop these forced measures and it did not know where it would end except that the way the arrangements were being made up during the course of the project the contractor lost considerable money. Furthermore, the contractor at the time was quietly requested by the Employer to provide inferior work and the difference was pocketed by the director of the SPO and others at the CPO.
The contractor was also obliged by the SPO to pay an extra eight percent "taxes and management fees" for the subcontracts. This was demanded because the SPO argued that it acted as an agent to procure subcontractors even though in some cases the subcontractor was the SPO itself or cronies of the senior officers of the SPO, even though the contractor was given no choice as to whether it could do that work itself or how it went about doing it, with subscontractors or not.
The the CWE reported to the investigation committee that the process of completing the construction camps and acquiring furniture and other appliances took a much longer time than it should have because the Sub-Project Office had endeavoured to act as the sub-contractor for procuring these items. It was a lump sump of about US$55,000 for all this work, including furniture and appliances, profit, and taxes. The contractor had spent a little over half on his work with some work yet to be carried out when the camps reached completion. The SPO demanded the left-over amount as their "fees" for having acted as agents or procurers of the furnishings and appliances. The contractor refused to pay such an usurious amount so there was a stalemate that led to delays in construction because the SPO refused to sign documents that were required for the work to proceed in a timely manner.
Subsequent research by the investigation committee revealed that numerous stalemates of this sort resulted in many of the delays to the work. It was all documented carefully by the contractor because it had intended to make claim for all the delays. It documented in detail all the meetings regarding these matters and with whom, so that it made for interesting revelations to the investigations committee.
The SPO not only charged the CWE for more than it actually paid, but in the end many of the furnishings that were sent to the construction camp were not the ones that had been bought ostensibly for the project.
Much of the old and poor furnishings of the sub-project office headquarters in Thanh Hoa city were loaded on the truck as well as some old personal furnishings of the staff. The office in Thanh Hoa was then furnished with the new furniture intended for the Bai Thuong Dam Project construction camp. Some of the SPO staff was found to have taken some of the new furnishings home to replace theirs that had been sent to Bai Thuong.
Consultant's inflated hotel charges pocketed by CPO and SPO officials
The investigations committee discovered that that consultants had to pay two or three times as much as Vietnamese to stay at hotels when they were in the field, such as at Thanh Hoa's Sao Mai Hotel and at Vinh, Nghe An province. Yet, the receipts were prepare dusing carbon copy paper and an empty pen that did not leave marks on the original. The consultants were given the carbon copy showing the amount they had actually paid (in US dollars). Subsequently, the original was filled in using a pen that worked and the Vietnamese rate in VN Dong was filled in. The difference in money was sent to the CPO offices in Hanoi by the CPO driver who accompanied the consultants to the field.
The investigation committee was aware of this scheme. It therefore had asked for the foreign exchange bank in Hanoi to provide only marked U.S. dollar bills to the consultant as it made its regular withdrawals. These were traced as they were used to cover charges at the hotels. They eventually ended up being deposited at various banks by senior CPO officials.
All in all, the investigations committee was able to report there had been consistent acts of corrupt practices, outright theft, collusion, economic and administrative mismanagement of the project. It made recommendations for a formal investigation by the prosecution office of all the parties concerned.