What’s behind Vietnam’s latest anti-corruption fight

Vietnam’s Communist Party chief Nguyen Phu Trong has likened his anti-graft campaign to a “blazing furnace,” one that’s caught hundreds of senior officials, business executives and others in its blast over the years.

While the country’s position has improved by more than 30 spots over the past decade on a global corruption perception index, it was still at 87th place last year out of 180 ranked. Now as Southeast Asia’s fastest-growing economy seeks to bolster its appeal as a destination for foreign investment in the midst of mounting trade tensions between the US and China, the fight seems to be flaring again.

1. What is Vietnam targeting ?

Trong, who won a rare third term last year, said in a televised speech last year that “each party cadre and member needs to shoulder the responsibility of being a role model. The higher the position and rank, the more responsibility one must take.” Eight inspection teams have been set up to deal with corruption cases, including at party committees and agencies, according to the Central Steering Committee on Anti-Corruption. More than 1,200 cases have been investigated this year, with more than 730 involving more than 1,500 defendants brought to court. Police have detained a number of executives as part of investigations into alleged stock price manipulation.

2. Who’s in the cross hairs ?

In the latest round, Health Minister Nguyen Thanh Long and Hanoi Mayor Chu Ngoc Anh were expelled from the Communist Party for violating its rules and state regulations that caused “huge losses.” In April police detained deputy Foreign Affairs Minister To Anh Dung over alleged bribery while he organized repatriation flights for Vietnamese abroad during the pandemic. The following month a former deputy health minister was sentenced to four years in prison for his role in a trading ring for counterfeit medicine. The Finance Ministry fired State Securities Commission Chairman Tran Van Dung for alleged “serious wrongdoings,” amid an ongoing investigation into stock trading. Soon after the head of the Ho Chi Minh City bourse was fired for what the Vietnam Stock Exchange called “very serious” shortcomings at work. Among the executives who have been detained are the former chairman of Bamboo Airways and its parent FLC Group JSC, Trinh Van Quyet; Tri Viet Securities former chief executive officer Do Duc Nam and Louis Holdings former chairman Do Thanh Nhan. Authorities have said they are also investigating cases involving a military medical university, former high-ranking coast guard officials and property fraud. 

3. What’s at stake ?

Vietnam has warned that corruption could put the party’s legitimacy and hold on power at risk as the public grows more intolerant of graft — echoing President Xi Jinping in neighboring, communist China. Aside from that, Vietnam, a country of roughly 100 million people, has much to gain economically if it can bolster its image as place to do business. Global manufacturers have been exploring ways to diversify their supply chains away from China, which has been caught up in pandemic lockdowns and a trade war with the US, and Vietnam has benefited. Its exports are equivalent to more than 100% of GDP, according to World Bank data, making it one of the most trade dependent countries in the world. Vietnam has also been seeking to have its stock market classified as emerging market — up from the current frontier status, which is the lowest and riskiest rung — and this could bring greater foreign investment. As a participant in the US’s new Indo-Pacific Economic Framework, Vietnam also has an opportunity to increase its links to its former wartime foe — its largest export market. 

4. How serious is the crackdown ?

People are sitting in jail, and some have been sentenced to death. But in Vietnam’s closely controlled, one-party state, it’s difficult to say if there’s any other motivation beyond building legitimacy. Freedom House, a US-based advocacy group, ranks Vietnam as “not free,” with a score last year of only 19 points out of 100. Human rights groups repeatedly accuse the government of tamping down on dissent. Transparency International, a Berlin-based anti-corruption group, gave it a score of 39 out of 100 last year, from 31 in 2012 — the year then-Prime Minister Nguyen Tan Dung’s government was tainted by a series of scandals. Arrests picked up again after a new administration took power in 2016 :

• Nguyen Xuan Anh, party chief in the central city of Danang, was removed from his post.

• Nguyen Xuan Son, former chairman of state-owned PetroVietnam and the ex-chief executive of Ocean Commercial Joint Stock Bank, was sentenced to death after being convicted for embezzlement.

• Ha Van Tham, the bank’s former chairman, was given a life sentence after being found guilty of the same charges.

• Former politburo member Dinh La Thang, another former PetroVietnam chairman, was sentenced in 2018 to 18 years for violating state regulations.

In 2021 the anti-corruption committee disciplined 618 party members for “corruption or intentional wrongdoings.” It also reported prosecuting 390 graft cases and recovering at least $400 million in assets.

5. Will there be more ?

The campaign is showing no signs of slowing. The Communist Party Central Committee on May 10 announced it was forming anti-corruption steering committees in every province. In his speech last year, Trong referenced “morality” some 40 times and said that he’d ordered more “aggressive, drastic and prompt” action in the fight against graft. Tran Khanh Hien, head of research at VnDirect Securities Corp., said the government’s moves this year have boosted confidence among foreign investors. But she added they would also want to see “how persistent and serious the authorities are.”

(Updates with latest round of probes. Earlier QuickTake was corrected in the third paragraph to make clear it was the Ho Chi Minh City bourse head who was fired.)

By Philip J. Heijmans – Bloomberg – June 7, 2022