Vietnam opens trial in $12.5 billion corruption case
Truong My Lan, the head of a Ho Chi Minh City-based real estate firm, faces charges, along with 84 associates and alleged accomplices.
Vietnam yesterday opened its trial in the case of the real estate tycoon Truong My Lan, who faces the death penalty in one of the country’s largest-ever corruption cases.
The 66-year-old, who headed real estate company Van Thinh Phat, is accused of using “thousands of ghost companies” to embezzle an eye-popping 304 trillion dong ($12.54 billion) from Saigon Commercial Bank (SCB), along with scores of accomplices. Lan is accused of paying scores of bribes to government officials and violating banking regulations, The Associated Press reported, citing a government document.
According to VnExpress, which has covered the case against Lan in detail since her arrest in late 2022, hundreds of police officers were deployed to ensure security on the opening day of the trial, which is taking place at Ho Chi Minh City People’s Court.
Lan’s alleged scheme was dazzlingly complex. As I attempted to detail late last year, citing a series of detailed reports by VnExpress, investigators claim that it involved more than 1,000 domestic and foreign shell companies that were set up under the auspices of Van Thinh Phat Group. They claim Lan and her accomplices used the SCB, of which she has been the majority shareholder since 2012, as their personal ATM, withdrawing an estimated 1 quadrillion dong ($44 billion) in loans against the savings of SCB’s customers between 2012 and 2022.
Of this, she eventually appropriated 304 trillion dong, an amount equivalent to nearly 3 percent of the country’s GDP in 2022, through complex machinations involving false loan applications and the aforementioned “ghost companies.” According to VN Express, the documents related to the case weigh six tons.
In announcing the outcome of its investigations into Van Thinh Phat in November, the Ministry of Public Security described Lan’s alleged violations as “extremely elaborate, meticulous, with detailed and carefully prepared scripts.” It recommended that she be charged with a variety of crimes, including bribery, violating banking regulations, and embezzlement.
Lan, who founded Van Thinh Phat in 1992, was arrested in October 2022, along with her granddaughter Truong Hue Van, 34, the CEO of Windsor Property Management. Van is also on trial for causing a loss of 1.1 trillion dong ($44.5 million) to the bank, as is Lan’s husband, Hong Kong billionaire Eric Chu, who is accused of helping her borrow money illegally from the bank, causing it a loss of VND9.12 trillion ($369 million).
Also on trial are a further 82 people who are alleged to have benefited from and helped prop up the complex architecture of graft. These include 45 SCB executives, 15 State Bank of Vietnam officials, three officials from the Government Inspectorate, and one former official from the State Audit Office.
As VnExpress reports, the Van Thinh Phat trial is expected to go on until April 29, during which time the court will hear 2,400 witnesses and other experts, including 40 lawyers. If found guilty, Lan faces the death penalty.
In purely monetary terms, Lan’s case is the largest that has yet been uncovered by Vietnam’s “blazing furnace” anti-corruption campaign, which has burned its way through the upper echelons of the Vietnamese political and business community since its launch in 2016. The brain-child of Nguyen Phu Trong, the general secretary of the Communist Party of Vietnam (CPV), the campaign has so far seen the arrest and dismissal of thousands of bureaucrats, government officials, and corporate executives. The blowtorch reached the highest levels of the Vietnamese government early last year, when President Nguyen Xuan Phuc and two deputy prime ministers were forced to step down, for “violations and wrongdoings” related to pandemic-era corruption scandals.
The fact that such a gargantuan case of graft was seemingly undeterred by the crackdown, and only came to light in 2022, raises interesting questions about where and when the campaign might end. In November, shortly after the allegations against Van Thinh Phat were made public, Trong said that the anti-graft efforts were only set to intensify. “We need to conduct the anti-corruption fight faster in a more efficient manner,” he said according to a Reuters report. “We won’t stop here, but will continue for the long term.”
As I wrote in November, the fact that the party-state has been waging a white-hot anti-corruption campaign for six years and is still unearthing massive cases of graft suggests that it is not (or not only) a case of corrupted morals among the country’s political and business elite. Instead, it reflects the “almost systemic nature of the problem – one that may be inseparable from the CPV’s monopoly on power.”
By Sebastian Strangio – The Diplomat – March 6, 2024