Vietnam’s Financial Crime Investigation Methods Face Scrutiny as Largest Fraud Case Goes to Trial

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The trial of Truong My Lan, chairwoman of Van Thinh Phat Holdings Group, and nearly 90 other defendants accused of embezzling over $12 billion from Vietnam’s largest bank by assets, Saigon Joint Stock Commercial Bank (SCB), has begun in Hanoi. The case is part of the country’s anti-corruption drive, which has led to multiple high-profile arrests and resignations, including that of former President Tran Dai Quang last year.

Background

Lan is accused of siphoning off the massive sum through unlawful loans to shell companies from early 2018 to October 2022. The alleged fraud could be one of the largest in Asia, surpassing Malaysia’s 1MDB corruption scandal, which involved about $4.5 billion.

Unprecedented Trial

The trial, expected to last until April, is unprecedented in its scale, with thousands of witnesses expected to be summoned and over 200 lawyers participating. Investigators claim that Lan, who effectively controlled SCB through dozens of proxies, used her position to orchestrate the merger of the bank with two other lenders in 2011.

Concerns about Corruption

The case has raised concerns about widespread corruption in Vietnam, which has long plagued the country. A report by the United Nations Development Programme and other organizations published earlier this year found that up to 90% of applicants for land certificates in some provinces paid bribes, while kickbacks are common in public hospitals.

Questions about Motives

Despite years of anti-corruption efforts, known locally as the “blazing furnace,” corruption remains rampant in Vietnam. Many have questioned the motives behind the arrests and resignations, with some arguing that they may be a means to silence critics rather than genuinely combat graft.

International Implications

The case is also notable for its international implications, with top auditors such as Ernst & Young and KPMG failing to detect any concerns about SCB’s financial health during their audits. The auditors did not respond to requests for comment.

Need for Stricter Regulations

The trial has sent shockwaves through Vietnam’s finance sector, highlighting the need for stricter regulations and more effective law enforcement measures to combat financial crime. As investigators delve deeper into the case, it remains to be seen whether the country will finally succeed in stamping out corruption and holding those responsible accountable.

The Road Ahead

It is unclear what the outcome of the trial will be or how far-reaching the consequences will be for those involved. However, one thing is certain: the trial has brought international attention to Vietnam’s fight against financial crime and has raised questions about the country’s ability to combat corruption.