Vietnamese billionaire sentenced to death for one of the biggest bank frauds in history

It was the most spectacular trial ever held in Vietnam of one of the biggest bank frauds the world has ever seen.

Behind the majestic yellow portico of the colonial-era courthouse in Ho Chi Minh City, a 67-year-old Vietnamese property developer was sentenced to death on Thursday for looting one of the country’s largest banks over an 11-year period.

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It’s a rare verdict: she is one of the few women in Vietnam sentenced to death for a white-collar crime.

The decision It is a reflection of the dizzying magnitude of the fraud.

Truong My Lan was convicted of borrowing US$44 billion from Saigon Commercial Bank (SCB).

The verdict requires him to pay back $27 billion, an amount prosecutors say may never be recovered.

Some believe the death penalty is the court’s way of pressuring her to return some of the missing billions.

The normally secretive communist authorities were unusually frank about this case, giving minute details to the media.

They said 2,700 people were subpoenaed to testify and that 10 state prosecutors and about 200 lawyers were involved.

The evidence was in 104 boxes weighing a total of six tons. Eighty-five defendants were tried with Truong My Lan, who denied the charges.

“I don’t think there was a legal spectacle like this in the Communist era,” says David Brown, a retired U.S. State Department official with long experience in Vietnam. “There certainly hasn’t been anything on this scale.”

The trial was the most dramatic chapter yet in the “Burning Furnace” anti-corruption campaign led by Communist Party General Secretary Nguyen Phu Trong.

Nguyen Phu Trong, a conservative ideologue steeped in Marxist theory, believes that popular outrage at rampant corruption poses an existential threat to the Communist Party’s monopoly on power.

He began campaigning in 2016 after overcoming his rival, the then pro-business prime minister, to retain the party’s top job.

Communist Party General Secretary Nguyen Phu Trong is leading an anti-corruption campaign. (GET IMAGES).

As part of the campaign, two presidents and two deputy prime ministers were forced to resign and hundreds of officials were disciplined or arrested.

Now, one of the richest women in the country has joined the list.

Two tons of banknotes

Truong My Lan comes from a Chinese-Vietnamese family from Ho Chi Minh City, formerly Saigon.

The city has long been the commercial engine of the Vietnamese economy, since its days as the anti-communist capital of South Vietnam, with a large ethnic Chinese community.

The businesswoman started out as a market vendor, selling cosmetics with her mother, but began buying land and properties after the Communist Party began a period of economic reform, known as Doi Moi, in 1986.

In the 1990s, it had a large portfolio of hotels and restaurants.

Although Vietnam is best known outside the country for its rapidly growing industrial sector, as an alternative supply chain to China, most wealthy Vietnamese They made money by developing and speculating properties.

All land is officially owned by the State. Access to them often depends on personal relationships with state officials. Corruption increased as the economy grew and became endemic.

In 2011, Truong My Lan was a well-known business figure in Ho Chi Minh City and was authorized to organize the merger of three smaller, cashless banks into one larger entity: Saigon Commercial Bank.

Vietnamese law prohibits any individual from owning more than 5% of the shares of any bank.

But prosecutors say that through hundreds of shell companies and people acting as their representatives, Truong My Lan actually owned more than 90% of Saigon Commercial.

The businesswoman started selling cosmetics with her mother. (EPA).

They accused her of using that power to appoint her own people as managers and then order them to approve hundreds of loans to the network of shell companies she controlled.

The amounts withdrawn are shocking. Its loans represented 93% of all the bank’s loans.

According to prosecutors, over a three-year period beginning in February 2019, he ordered his driver to withdraw 108 trillion Vietnamese dong, more than $4 billion, in cash from the bank and store it in his basement.

This amount of money, Even if it was all in Vietnam’s largest denomination banknotes, it would weigh two tons.

The role of government

Truong My Lan was also accused of generous bribery to ensure her loans were never scrutinized.

One of the individuals tried was a chief inspector of the Central Bank, accused of accepting a bribe of US$5 million.

The amount of publicity officially released about the case channeled public outrage over corruption. Her tired, makeup-free appearance in court contrasted sharply with the glamorous publicity photos people had seen of her in the past.

But questions have also been raised about how he managed to continue the alleged fraud for so long.

The trial took place in Ho Chi Minh City, where the Saigon Commercial Bank was headquartered. (GET IMAGES).

“I’m perplexed,” says Le Hong Hiep, who directs the Vietnam Studies Program at ISEAS – Yusof Ishak Institute in Singapore.

“Because it was no secret. It was well known in the market that Truong My Lan and his Van Thinh Phat group used SCB as their own piggy bank to finance the massive acquisition of real estate in the most privileged locations.

“It was obvious that I had to get the money from somewhere. But it is a very common practice. SCB is not the only bank that is used in this way. So, “Maybe the government has lost sight of this because there are many similar cases on the market.”

David Brown believes she was protected by powerful figures who dominated business and politics in Ho Chi Minh City for decades.

And he sees a larger factor at play in the way this trial is being handled: an attempt to reassert the Communist Party’s authority over the southern country’s carefree business culture.

“What Nguyen Phu Trong and his allies in the party are trying to do is regain control of Saigon, or at least prevent it from escaping,” says Brown.

“Until 2016, the party in Hanoi pretty much let this Chinese-Vietnamese mafia run the place. They made all the right noises that local communist leaders should make, but at the same time they squeezed the city to receive his share of the money that was being made there.

At 79, party chief Nguyen Phu Trong is in fragile health and will almost certainly have to retire at the next Communist Party Congress in 2026, when new leaders will be elected.

He has been one of the longest-serving and most important general secretaries, restoring the authority of the party’s conservative wing to a level not seen since the reforms of the 1980s.

Of course he doesn’t want to take the risk. of allowing too much openness that undermines the party’s control over political power.

But he is caught in a contradiction. Under his leadership, the party set the ambitious goal of reaching the level of a rich country by 2045, with an economy based on technology and knowledge.

This is what drives an increasingly closer partnership with the United States.

However, faster growth in Vietnam almost inevitably means more corruption.

If you fight corruption too much, you run the risk of extinguishing a lot of economic activity.

There are already complaints that bureaucracy has slowed down, as officials avoid making decisions that could implicate them in a case of corruption.

“That’s the paradox,” says Le Hong Hiep. “Their growth model has depended on corrupt practices for too long. Corruption has been the lubricant that has kept the machinery running. If you stop the lubricant, things can stop working.”

Source: Elcomercio