{"id":50118,"date":"2024-04-16T11:12:45","date_gmt":"2024-04-16T18:12:45","guid":{"rendered":"https:\/\/vietvalley.com\/van-thinh-phat-case-tests-investor-confidence-in-vietnam\/"},"modified":"2024-04-16T11:12:45","modified_gmt":"2024-04-16T18:12:45","slug":"van-thinh-phat-case-tests-investor-confidence-in-vietnam","status":"publish","type":"post","link":"https:\/\/vietvalley.com\/en\/van-thinh-phat-case-tests-investor-confidence-in-vietnam\/","title":{"rendered":"Van Thinh Phat case tests investor confidence in Vietnam"},"content":{"rendered":"

A Vietnamese court decision handing Truong My Lan a death sentence for masterminding a US$27 billion fraud has been met with shock by international observers who say the chairwoman of developer Van Thinh Phat was likely protected by high-level officials who should share some of the blame.<\/span><\/p>\n\n

Last week, Ho Chi Minh City\u2019s People\u2019s Court <\/span>convicted Lan, 68, of bribery, embezzlement and violating banking regulations<\/span><\/a>. More than 80 others were given lengthy prison terms for their involvement.<\/span><\/p>\n\n

Lan owned 91.5% of Saigon Commercial Bank and over 10 years ordered bank officials to approve more than 2,500 loans to shell companies she controlled, causing the bank to lose the equivalent of US$27 billion.<\/span><\/p>\n\n

Lan ordered subordinates to bribe auditors at the State Bank of Vietnam to cover her tracks, according to state media. Head banking inspector Do Thi Nhan received US$5.2 million in bribes, while deputy chief inspector Nguyen Van Hung received US$300,000, the reports said.<\/span><\/p>\n\n

The case demonstrates poor management capacity and has damaged trust of the Communist Party and government, experts said, and will cause foreign investors to think twice before betting on the Southeast Asian nation.<\/span><\/p>\n\n

The case is \u201cunprecedented \u2026 even on a global scale,\u201d said U.S.-based attorney Dang Dinh Manh. He called the failure of prosecutors to hold officials from the Ministry of Finance and State Bank accountable \u201chighly unreasonable.\u201d<\/span><\/p>\n\n

\u201cThis reflects the regime\u2019s irresponsibility towards the financial system, the national banking system, and the rights and interests of innocent people,\u201d he said. \u201cGiven the current political situation in Vietnam, maintaining an authoritarian regime without control over state power continues to be a favorable condition for serious corruption.\u201d<\/span><\/p>\n\n

\u2018Unstable\u2019 financial system<\/p>\n\n

Experts interviewed by international media outlets described the sentence as a part of the \u201cBlazing Furnace\u201d anti-corruption campaign launched by Communist Party General Secretary Nguyen Phu Trong and suggested it would harm Vietnam\u2019s image at a time when foreign investors are seeking to move their operations out of neighboring China.<\/span><\/p>\n\n

They called the Van Thinh Phat case an example of a power struggle within the senior ranks of the party that is shaking investor confidence and questioned why more high-level officials weren\u2019t held responsible when the scandal occurred under their watch.<\/span><\/p>\n\n

The case shows that Vietnam\u2019s financial sector is \u201cunstable,\u201d said Vu Tuong, the head of the political science department at the University of Oregon. And while the government may hope that it would reflect a determination to fight corruption, it also lays bare poor management capacity, he said.<\/span><\/p>\n\n

\u201cThe political impact is a decline in trust in the Communist Party and the government,\u201d Tuong said.<\/span><\/p>\n\n

Observers noted that the court ruling focused only on punishing Lan and Saigon Commercial Bank, and recovering assets, while failing to address how to compensate the bank\u2019s customers, who were the direct victims of the fraud.<\/span><\/p>\n\n

Van Thinh Phat Group and its affiliates were accused of illegally issuing bonds to raise money from investors from 2018 to 2020. Lan’s company issued 25 bonds worth US$1.24 billion, all through proxies, and sold to buyers through Saigon Commercial Bank.<\/span><\/p>\n\n

Last week\u2019s verdict ignored the losses of an estimated 42,000 victims who bought the fraudulent products.<\/span><\/p>\n\n

Investigators have said Lan will face additional charges in another trial that will address the bond fraud, although investors are likely to bear some of the blame for failing to thoroughly research Van Thinh Phat Group and the high-interest rate it promised.<\/span><\/p>\n\n

Compensating victims<\/p>\n\n

Manh, the U.S.-based attorney told RFA that the thousands of customers who deposited money into Saigon Commercial Bank should be made whole.<\/span><\/p>\n\n

\u201cReturning the exact amount of money stolen from the victims is entirely justifiable and legal,\u201d he said in an interview. \u201cThe exclusion of the 42,000 victims from the legal proceedings \u2026 was a deliberate action aimed at identifying all assets being seized by the prosecuting authority from Van Thinh Phat Group, Lan, and other defendants as illegally acquired property for confiscation.\u201d<\/span><\/p>\n\n

Manh said that involving them in the second phase of the case, if that trial proceeds, \u201cwould be entirely meaningless\u201d as the seized assets would no longer be available at that point.<\/span><\/p>\n\n

\u201cTherefore, the 42,000 victims will have been robbed twice,\u201d he said.<\/span><\/p>\n\n

Tuong at the University of Oregon said that the fact that Saigon Commercial Bank hasn\u2019t been dissolved suggests that Vietnam’s government is trying to save it through debt restructuring negotiations or by finding a buyer who is willing to purchase the debts at a reduced price.<\/span><\/p>\n\n

\u201cAs long as Saigon Commercial Bank allows customers to withdraw money freely, we cannot definitively conclude that the customers have suffered losses,\u201d he said. \u201cIf depositors demand withdrawals from the bank en masse, and Saigon Commercial Bank does not have enough money \u2026 then it must declare bankruptcy or the government must dissolve it.\u201d<\/span><\/p>\n\n

\u201cIf I were one of the businessmen who wasn\u2019t arrested,\u201d he said, \u201cI would transfer my capital abroad as soon as possible, because I don\u2019t know when it will be my turn.\u201d<\/span><\/p>\n\n

Translated by Anna Vu. Edited by Joshua Lipes and Malcolm Foster.<\/p>\n

\u00a0<\/p>\n

Tin t\u1eeb RFA Read More<\/a><\/p>","protected":false},"excerpt":{"rendered":"

A Vietnamese court decision handing Truong My Lan a death sentence for masterminding a US$27 billion fraud has been met with shock by international observers who say the chairwoman of developer Van Thinh Phat was likely protected by high-level officials who should share some of the blame. Last week, Ho Chi Minh City\u2019s People\u2019s Court …<\/p>","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[82,239],"tags":[246,251],"class_list":["post-50118","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-society","category-vietnam","tag-english","tag-rfa"],"_links":{"self":[{"href":"https:\/\/vietvalley.com\/en\/wp-json\/wp\/v2\/posts\/50118","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vietvalley.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vietvalley.com\/en\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/vietvalley.com\/en\/wp-json\/wp\/v2\/comments?post=50118"}],"version-history":[{"count":0,"href":"https:\/\/vietvalley.com\/en\/wp-json\/wp\/v2\/posts\/50118\/revisions"}],"wp:attachment":[{"href":"https:\/\/vietvalley.com\/en\/wp-json\/wp\/v2\/media?parent=50118"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vietvalley.com\/en\/wp-json\/wp\/v2\/categories?post=50118"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vietvalley.com\/en\/wp-json\/wp\/v2\/tags?post=50118"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}