Calling for Billions, Paying in Millions – “Virtual Auction”

As recent auctions have been widely regarded by the public as "ridiculous" and "shameful," Mr. Vu Manh Hung, the representative bidding on behalf of Mr. Do Anh Dung, Chairman of Tan Hoang Minh Group, despite winning the auction for a pair of Tu Linh vases at the price of 6.05 billion VND, replied to Lac Viet on June 6, declining to purchase the said asset.

The reason given for refusing to purchase the asset is simply that Mr. Do Anh Dung had only authorized Mr. Hung to bid up to a maximum of 3 billion VND. However, during the auction, Mr. Hung may have experienced "enthusiasm" and bid higher than the delegated amount.

Also noteworthy are other high-profile but failed auctions, such as the ruby stone priced at 47.5 billion VND during the Miss Earth pageant, and the mobile phone sim card 0988888888 priced at 1.1 billion VND, where the businessman did not pay the bid amount as committed, and only nearly 6 years later was the sim card handed over to a new owner.

A pair of Tu Linh vases will be sold to the person offering 6 billion VND, the owner of Hai Phat Group, who is also a real estate magnate.

Some opinions from VnExpress.net readers

The legal secretary would like to cite a heartfelt comment from a VnExpress.net reader:

"Calling it a charity auction means the actual value is not necessary. The auction house needs kindness, but instead receives the flashy vanity of fake benefactors. A flashy display of opportunism where those in need actually become opportunities for these so-called benefactors. As a Vietnamese person, I feel truly ashamed. However, it must be said that our auction laws are not stringent! As far as I know, in foreign countries, a deposit equal to the actual value of the auctioned item is required (only applicable to charity). Participants need to have money in the bank and be verified by the organizers – the money will be taken from the bank if the participant wins. Hence, they don't act recklessly as we do! The deposit is deducted by 30% and considered a contribution to the program because the participant has been introduced by the program. That’s how it is.”

The question arises, since when has the noble purpose of charity auctions become a "branding platform" or "advertising playground" where businesses only need to spend a few tens of millions, very little compared to the prices they "called out" during the auction.

Currently, auction business in Vietnam has not been issued a separate law but is primarily regulated under Section 2, Chapter VI of the Law on Commerce 2005 and is considered a civil transaction subject to the Civil Code 2005, Decree 17/2010/ND-CP and guiding decrees. However, the regulations themselves from these legal documents also contain inconsistencies causing difficulties for the implementers. For example, the Commercial Law does not require participants to deposit money, this depends on the organizer's intention, "may require participants to deposit money, not exceeding 2% of the starting price of the auctioned asset" (Article 199). Decree 17/2010/ND-CP regulating the government's auction of assets requires participants to pay auction participation fees and pre-deposits, this is a mandatory regulation, with the pre-deposit amount agreed by the auctioning organization and the asset owner but at least 1% and not exceeding 15% of the starting price of the auctioned asset. Therefore, auction organizers must carefully consider using appropriate legal frameworks to benefit themselves and asset owners.

Draft Auction Law – Raising Deposit Amounts:

Many opinions suggest that the deposit amount is too little, with no penalty mechanism, leading to an increase in fake auctions, exploiting auction programs to promote brands. The Draft Auction Law issued on May 19, 2015, shows positive signs from the government by increasing the deposit amount as regulated in Article 34, Clause 1 of the Draft:

Participants in asset auctions must pay a pre-deposit. The pre-deposit amount agreed by the auction organization and the asset owner is at least 5% and not exceeding 20% of the starting price of the auctioned asset. The pre-deposit is deposited in an escrow account at a credit institution. Notably, the pre-deposit will be paid into a separate account of the auction business at the credit institution, or the parties may agree to substitute the pre-deposit with a bank guarantee. This will help enhance transparency and strengthen control over the pre-deposit.

Improving Auctioneer Quality:

To improve auctioneer quality and increase professionalism in auctions, the Draft Law also stipulates additional qualifications for becoming an auctioneer: a bachelor's degree in law, economics, accounting, or banking finance with at least five years of working experience in the trained field, six months of auctioneer training, six months of auctioneer practice, and passing the auctioneer practice result assessment. This is unlike the current situation where anyone could become an auctioneer as per Decree 17/2010/ND-CP.

From the Draft to Law is a long process of amendments. Currently, the existing laws do not meet the needs of asset owners and auction organizers, leading to hesitations in bringing assets to auction and fears of losses in organizing auctions... This is a common loss for the country's development. For now, we can only wait for answers from the lawmakers.

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