Fake milk powder producers busted for paying $150,000 bribe
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Two men behind a fake milk powder production ring allegedly paid US$150,000 as bribe after being exposed.
The Ministry of Public Security announced Monday that its Criminal Investigation Agency had initiated legal proceedings against Vu Manh Cuong and Hoang Manh Ha, the CEO and deputy CEO of Hacofood Group and Rance Pharma, for “bribery”, Pham Gia Khai, former CEO of Vietnam Pharmaceutical JSC, for “brokering bribery” and Nguyen Van Quan for fraud and property embezzlement.
According to preliminary investigation, after their goods were temporarily seized by the environmental police in December last year, Ha and Cuong decided to bribe their way out.
Their goal was to get away with a fine rather than face criminal charges.
Cuong gave Ha $150,000, and he handed it over to Khai.
Khai gave the money to Quan to “settle” the matter, ensuring they do not face criminal charges for producing and selling fake goods.
Quan had falsely claimed to have connections with government authorities and individuals in power, suggesting he could reduce the severity of the legal consequences and prevent criminal prosecution.
Khai took him at his word and handed over the money, but Quan kept it for his personal use.
On April 10 the Criminal Investigation Agency charged Ha and Cuong along with four accomplices with the production and sale of fake food products and violating accounting regulations, resulting in serious consequences.
The fake milk powder production ring started operation in August 2021 when Ha and Cuong noticed the increasing demand for milk powder.
The falsely claimed their product included bird’s nest extract, cordyceps, macca powder, and walnut powder.
The milk powder was distributed nationwide, primarily targeting people with diabetes, kidney disease, premature infants, and pregnant women.
The accused instructed their employees to replace the ingredients and add flavoring agents and additives.
The investigators determined that the quality of some substances in the milk powder was less than 70% of stated levels, sufficient to prove the product fake.
The suspects exploited a regulation that allows businesses to self-declare the quality, content, nutritional composition, and effects of their products.
By the time of their arrest on April 11, the ring was suspected of producing 573 types of fake milk powders, generating nearly VND500 billion (US$19.23 million) in revenues.
The police also discovered that Rance Pharma and Hacofood had underreported their actual revenues in their records to evade tax worth more than VND28 billion.
The Criminal Investigation Agency believes there is enough evidence to prove 12 varieties of milk powders are counterfeit products. The investigation into the remaining 72 is ongoing.
Questions & Answers
Q.What measures did the fake milk powder producers use to avoid detection or scrutiny?
What measures did the fake milk powder producers use to avoid detection or scrutiny?
The suspects exploited a regulation allowing businesses to self-declare product quality, content, nutritional composition, and effects. This loophole enabled them to falsely claim ingredients and quality levels for their fake milk powders.
Q.Who was the intended market for the fake milk powder products?
Who was the intended market for the fake milk powder products?
The fake milk powder was primarily distributed nationwide, specifically targeting vulnerable groups. These included people with diabetes, kidney disease, premature infants, and pregnant women, who likely sought nutritional benefits.
Q.How much revenue did the fake milk powder production ring generate before its leaders were arrested?
How much revenue did the fake milk powder production ring generate before its leaders were arrested?
By the time of their arrest on April 11, the ring was suspected of generating nearly VND500 billion, which equates to approximately US$19.23 million, from the sale of their counterfeit products.
Q.What other illegal activities were the companies involved in, besides producing fake milk powder?
What other illegal activities were the companies involved in, besides producing fake milk powder?
The police discovered that Rance Pharma and Hacofood had underreported their actual revenues in their records. This was done to evade tax, amounting to more than VND28 billion, in addition to the fake product sales.
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