Vietnam’s Largest Bank Fraud: The Spectacular Trial of Truong My Lan and the “Blazing Furnaces” Crackdown
A Historic Trial in Ho Chi Minh City
In a landmark trial, a senior Vietnamese property developer, Truong My Lan, was sentenced to death for orchestrating one of the largest bank frauds in the world, draining $44bn from the Saigon Commercial Bank over a decade.
The Scene at the Colonial-era Courthouse
At the historic trial, held at the colononial-era courthouse in Ho Chi Minh City, Truong My Lan, a 67-year-old woman, stood before the judge, becoming one of very few women in Vietnam to receive the death sentence for a white-collar crime.
Unprecedented Scale The fraud required the return of an unattainable $27bn.
Unprecedented Transparency in the Communist Era
The Vietnamese authorities, known for their secrecy, provided unprecedented detail for the media, revealing:
- 2,700 people summoned
- 10 state prosecutors
- Around 200 lawyers
- 85 others tried alongside Truong My Lan, with four receiving life sentences and the rest being given prison terms ranging from 20 years to three years suspended.
David Brown, a retired US state department official with extensive experience in Vietnam, described this trial as “unprecedented in the communist era.”
The “Blazing Furnaces” Anti-corruption Campaign
The trial serves as the backdrop for this groundbreaking event as it occurred during the “Blazing Furnaces” anti-corruption campaign, led by Communist Party General Secretary Nguyen Phu Trong.
Why the Campaign? Believing that rampant corruption poses a significant threat to the Communist Party’s grip on power, Nguyen Phu Trong initiated the campaign in response to the increasing public outrage.
Truong My Lan: From Market Stall Vendor to Business Tycoon
Truong My Lan, a businesswoman from a Sino-Vietnamese family, started her business ventures as a market stall vendor. As Vietnam embraced economic reforms in the late 1980s, she expanded her portfolio to include hotels, restaurants, and large-scale real estate projects. By the 1990s, Truong My Lan had amassed significant wealth.
The Saigon Commercial Bank Scandal
In defiance of Vietnamese law, Truong My Lan had engineered the merger of three struggling banks into a larger entity, the Saigon Commercial Bank. By 2011, she is alleged to have possessed more than 90% ownership through hundreds of shell companies and proxies, which allowed her to appoint her confidants as managers and secure hundreds of loans for her network of shell companies.
Magnitude of Loan Withdrawals Truong My Lan’s loan withdrawals constituted 93% of all the bank’s lending, with around $4bn being cashed out during a three-year period starting in 2019.
Corruption in Vietnam’s Business Sector
Corruption became widespread and endemic in the lucrative business environment where real estate speculation and property development relied heavily on exploiting personal relationships with state officials to gain access to land.
Questions and Concerns Despite the blatant nature of her alleged misdeeds, questions remain about why the fraud continued for so long and whether she was protected by powerful figures in Ho Chi Minh City politics. Some argue the trial is an attempt to regain the Communist Party’s control over the free-wheeling business culture in the southern region.
A Challenge for Nguyen Phu Trong
Nguyen Phu Trong, 79, the party chi, faces a significant challenge in his efforts to stamp out corruption while maintaining the economic growth Vietnam has experienced.
Corruption’s Inevitability With the ambitious goal of achieving the status of a rich country by 2045 with a technology- and knowledg e-based economy, corruption remains an inevitable byproduct. Le Hong Hiep, director of the Vietnam Studies Programme at the ISEAS-Yusof Ishak Institute, points out, “If they stop the grease, things may not work anymore.”