Vietnam’s Largest Bank Fraud: 67-Year-Old Property Developer Sentenced to Death

In a historic trial held in Ho Chi Minh City on April 11, 2024, Truong My Lan, a Vietnamese property developer, was sentenced to death for masterminding one of the largest bank frauds in history, worth over $44bn (£35bn). This groundbreaking trial marked a turning point in Vietnam’s ongoing battle against white-collar crime.

The Trial of Truong My Lan

At the stately yellow portico of a colonial-era courthouse, a 67-year-old mother of two, Truong My Lan, was convicted of looting the Saigon Commercial Bank over a period of 11 years. She is among the very few women in Vietnam to be sentenced to death for a white collar crime, demonstrating the sheer scale of the fraud.

Verdict and Penalties

The judge condemned Truong My Lan for exploiting the trust of the bank and the Vietnamese people by illegally obtaining $44bn in loans. The verdict requires her to return $27bn, although it is unclear whether this sum can ever be recovered. Some observers speculate that the death penalty is intended to motivate her to return some of the lost funds.

Witnesses and Evidence

The communist authorities provided unprecedented transparency during the trial. They revealed that:

2,700 witnesses were summoned to testify.
Over 100 prosecutors and 200 lawyers were involved.
The evidence was presented in 104 boxes that weighed a combined six tonnes.

Despite denying the charges, Truong My Lan and 85 others were found guilty. Four of her accomplices were sentenced to life in prison, while the rest received prison terms ranging from 20 years to three years suspended.

Truong My Lan’s husband and niece were also tried and received jail terms of nine and 17 years, respectively. The defendants’ appearance in court starkly contrasted their previous public images.

Astonishment and Significance

David Brown, a retired US state department official with extensive experience in Vietnam, expressed his astonishment over the trial’s magnitude and openness:

“There has never been a show trial like this, I think, in the communist era. The scale is truly unprecedented."

Blazing Furnaces Anti-Corruption Campaign

This trial is a significant milestone in Vietnam’s “Blazing Furnaces” anti-corruption campaign, headed by Communist Party Secretary-General Nguyen Phu Trong. This campaign is an attempt to:

Reassert the Communist Party’s authority over the free-wheeling business culture in Hanoi.
Stop the mafia-like control from slipping away.

Motivations and Background

Truong My Lan comes from a prominent Sino-Vietnamese family in Ho Chi Minh City, the economic powerhouse of Vietnam. She started her career as a market stall vendor but became a successful property developer after economic reforms in 1986. Her portfolio included hotels and restaurants. Despite being recognized for its manufacturing sector, most of the country’s wealthiest individuals have made their fortunes in property development and speculation.

The government’s control over land allows for significant opportunities for corruption, which escalated as the economy grew. Prosecutors claim that Truong My Lan managed to control more than 90% of the Saigon Commercial Bank through hundreds of shell companies and proxies. She appointed her own people as managers, who then approved loans to her network of shell companies.

Fraudulent Activities and Public Outcry

Between 2019 and 2021, Truong My Lan reportedly withdrew over $4bn in cash from the bank and hid it in her basement. She also allegedly bribed generously to ensure her loans went unscrutinized. A former chief inspector at the central bank was sentenced to life in prison for accepting a $5m bribe.

The public outcry over the fraud fueled by the official media coverage of the trial has raised questions about why she was able to continue her alleged fraudulent activities for so long. Experts are puzzled by the case:

“It’s odd that Truong My Lan was able to get away with this for so long because it wasn’t a secret that she and her Van Thinh Phat group were using SCB as their own piggy bank to fund their real estate acquisitions."

Conclusion

The trial’s conclusion marks a bold step in Vietnam’s efforts to combat corruption, demonstrating the party’s determination to regain control of the financial sector and restore trust in its institutions. However, it also raises questions about the role of powerful figures in Ho Chi Minh City’s business and political spheres, their potential influence on the trial, and the ongoing tension between economic growth and corruption.