Vietnam, known for its lively beaches, culture and delicious dishes, is also known as a country that gives the harshest legal punishment, that is the death penalty for crimes related to public safety or national security. In total there are 22 crimes that carry death penalty including murder, rape, armed robbery, drug trafficking, fraud and a range of economic crimes such as corruption, embezzlement etc.
If you are found guilty for trafficking 100 grams or more of heroin, cocaine or any similar substance, you’ll most likely face a death sentence in Vietnam and this is the reason Vietnam is consistently ranked among the countries with the highest number of executions.
And in a recent case involving Vietnamese billionaire Truong My Lan, has been sentenced to death for fraud and embezzlement and this decision has sent shockwaves across the world as usually punishment this harsh is only reserved for people who has committed a violent crime like murder but as Vietnam is struggling from all time high corruption, it seems like it is sending a signal to the economic offenders that if caught you will face the same fate.
So, What are the charges on Truong My Lan? How did she become so powerful in the first place? and How this case marks a new chapter in Vietnam’s fight against corruption?
Table of Contents
- From Real Estate Tycoon to Fallen Billionaire: The Crimes of Truong My Lan
- Beyond Truong My Lan: A Look at Widespread Corruption in Vietnam
- The Blazing Furnace Campaign:
From Real Estate Tycoon to Fallen Billionaire: The Crimes of Truong My Lan
Troung My Lan, once a self-made businesswoman, who came from nothing and became a real estate mogul is today fighting for her survival. At the age of 67, she was sentenced to death in Vietnam but how did it all go so wrong so fast?
This is the story of how Troung My Lan syphoned billions of dollars from Saigon Commercial Bank (SCB), gave millions of dollars in bribes to manipulate government officials and to look the other way, exploit loopholes in the vietnamese banking laws and set up hundreds of shell companies to commit a fraud this big.
- Leveraging the law: Vietnam has a law that limits individual ownership in banks at around 5% so that no individual can attempt a takeover of a bank. So, Lan allegedly set up hundreds and I mean over 1100 Shell companies (that is those companies with no real business and only existing on paper) to buy shares in SCB. Each individual purchase by these shell companies seemed insignificant but by clubbing the shares of these shell companies she amassed a controlling stake in the bank.
- Proxies: In order to distance herself from these shell companies, Troung My Lan, hired a number of individuals to act as the face for these shell companies. These proxies however acted on the instruction of Troung My Lan and therefore she became a de facto owner of these shell companies.
- Getting Control of Saigon Commercial Bank (SCB): Once the shell companies purchased enough shares in SCB and got a controlling stake in it, Troung My Lan placed persons loyal to her in key management positions within SCB and this ensured her influence in the functioning of the bank especially in the loan approval process.
- Getting the Money: And finally going for the kill, once she got complete influence of the banks after completing the above steps, Troung My Lan went on a roll syphoning billions of dollars out of the bank in the form of loans to these shell companies, which amounts to an eye-popping 93% of all SCB’s lending over the past 11 years. The total loan amount as of today amounts to a staggering 44 Billion US Dollars out of which 27 Billion US dollars are yet to be returned which roughly amount to 6% of Vietnam’s GDP.
This scheme, although very well planned, was destined to fail some day and when the house of cards started falling, it took out the entire Vietnamese banking system with it.
Also Read: The Rise and Fall of China’s Belt and Road Initiative (BRI)
Beyond Truong My Lan: A Look at Widespread Corruption in Vietnam
Troung My Lan’s case is not one of a kind but exposes a deeper scar in the Vietnamese Society: Widespread Corruption. Bribery and corruption are deeply penetrated in Vietnamese society, becoming a part of daily life, destroying trust in the institutions and slowing down the economic progress of Vietnam.
How Deep is Corruption in Vietnam?
Corruption and bribery is a part of daily life in Vietnam, people are expected to pay a bribe even for the basic services. A 2015 Transparency International survey found that 64% of Vietnamese citizens believed corruption was a major problem in their daily lives.
You literally have to pay a bribe for almost any government service, whether it is getting Land-use certificates, getting your property registered or any other bureatic service where you are expected to meet a government employee.
Even to get access to quality healthcare, you’ll have to bribe the doctor and to get your kid into a good school you’ll have to pay bribes.
This is how deep rooted corruption is in Vietnam and this normalisation of corruption in the society erodes public trust in institutions and discourages honest participation in the system.
So, How is the current Vietnam Leadership handling this situation?
The Blazing Furnace Campaign:
The Current General Secretary Nguyen Phu Trong of Vietnam launched an anti-corruption campaign named “Blazing Furnace“, a campaign which is aimed to control corruption at all levels of government and society.
The Troung My Lan Case along with other high-profile crackdowns, is an attempt by the government to restore public trust. This campaign has since resulted in arrests of various High-Ranking officials including presidents, deputy prime ministers, other party members and has also resulted in various resignations and dismissals at all levels of the government.
This is a good thing, as this campaign is now sending a clear signal to the people sitting in powerful offices that sooner or later there will be a consequence for their actions.
And the results are showing up as Vietnam’s ranking has improved from 28 in 2012 to 41 in 2023 in Transparency International’s Corruption Perception Index (CPI). Although not ideal, this shows that the anti-corruption campaign is going the right way.
And although, Truong My Lan’s death sentence is not yet final as she has filed an appeal against it but her conviction has restored the public’s trust in the system and it also marked the first time in Vietnam’s history that a senior official from a state owned enterprise has been found guilty of such serious corruption allegations.