Financial Crime World

Vietnam’s Largest Bank Heist: Truong My Lan Sentenced to Death in Historic Fraud Trial

By Thuy Trang & Hoang Du, Reuters

Background

In a landmark trial presided over by the Ho Chi Minh City People’s Court, Truong My Lan, a Vietnamese property developer, was sentenced to death on Thursday, 22nd April 2021, for masterminding one of the largest bank frauds in history.

The Fraudster: Truong My Lan

  • Truong My Lan, 67, is one of Vietnam’s richest women.
  • She was accused of looting the Saigon Commercial Bank (SCB) for over a decade.
  • Truong My Lan took out an estimated $44 billion in loans from SCB, using hundreds of shell companies as proxies.
  • She owned over 90% of SCB’s shares and appointed her own personnel as managers.

The Magnitude of the Fraud

  • Evidence spanning over ten thousand pages and weighing six tonnes was presented in the trial.
  • The funds from the fraud were used to issue loans to her network of front companies.
  • The financial extent of the fraud was massive, with Truong My Lan’s loans accounting for 93% of the bank’s total lending.
  • From February 2019 to 2020, she allegedly withdrew over $4 billion in cash from the bank.

The Anti-Corruption Campaign: “Blazing Furnaces”

  • The high-profile campaign, launched in response to growing public anger over unchecked corruption, was presided over by General Secretary Nguyen Phu Trong.
  • Over 85 individuals were charged, with four receiving life sentences and the remainder given terms ranging from 20 years to three years suspended.

The Impact on Vietnam

  • Widely regarded as one of the most spectacular trials in the Communist-ruled nation’s history, it unfolded against the backdrop of Ho Chi Minh City, amid concerns that the free-wheeling business culture of the city might be slipping away from the party’s control.
  • The case is significant as it marks a significant step towards greater transparency.

The Road to Wealth: From Market Vendor to Property Developer

  • Truong My Lan began her business ventures in developing and speculating on property, initially investing in hotels and restaurants.
  • She gained substantial wealth through the economic reforms introduced in the late 1980s.
  • She was granted permission to merge three struggling banks into the larger SCB entity in 2011.

Corruption in the Banking Sector

  • Allegations suggest that Truong My Lan gained control of more than 90% of the shares in the bank, giving her considerable power to appoint her representatives as the bank’s managers and approving loans for her network of shell companies.

Conclusion

  • The scale of the fraud and the length of time it went undetected have raised concerns about the role of powerful figures in the city’s business and political scene.
  • The government’s aggressive stance against corruption may be seen as an attempt to reestablish the Communist Party’s control over the business culture of Ho Chi Minh City.
  • The future of Vietnam’s development remains uncertain as the country tries to strike a balance between economic growth and corruption.