Vietnam’s Biggest Fraud Lands Businesswoman Death Sentence

A Ho Chi Minh City court has handed down a death sentence to Truong My Lan, a 67-year-old businesswoman accused of embezzling billions of dollars from Saigon Joint Commercial Bank (SCB). This verdict marks the first death sentence for a private individual in Vietnam for financial crime and sends shockwaves through the country’s business community.

The Fraudulent Activities

Lan, who founded Van Thinh Phat, a real estate company that developed luxury apartments, offices, hotels, and shopping malls, was accused of using SCB as her personal piggybank. Prosecutors claimed she embezzled billions via illegal loans to herself and confederates through thousands of shell companies at home and overseas.

The Trial and Verdict

The trial, which began just weeks ago, involved 84 defendants, including Lan’s husband, close relatives, 45 SCB staff members, and several officials from the Vietnam State Bank and Government Inspectorate. The case is seen as a major victory for Vietnam’s anti-corruption campaign, led by Communist Party General Secretary Nguyen Phu Trong.

Implications for International Firms

The verdict has significant implications for international firms looking to invest in Vietnam, which is keen to promote itself as a corruption-free destination. Samsung, LG, and Apple are among the many foreign companies that have invested heavily in the country, which aims to become an upper-middle-income economy by 2030 and a high-income economy by 2045.

Unanswered Questions

However, many questions remain unanswered about Lan’s crimes, including how she was able to build her vast real estate empire without elite connections and protections. Critics argue that the party apparatus and Ho Chi Minh City officials were likely involved in her rise and fall from grace.

Bureaucratic Paralysis

The draconian punishment handed down to Lan has already led to “bureaucratic paralysis” as officials become too afraid to make decisions. Business leaders are concerned that the death sentence may be counterproductive and overturned on appeal, rather than helping to recover losses and maintain investor confidence.

Global Concerns

Meanwhile, Washington is keen to promote its Comprehensive Strategic Partnership with Vietnam, which includes cooperation in semiconductors, supply chain diversification, and stability and prosperity in the South China Sea. However, human rights and environmental groups have expressed concerns about Vietnam’s treatment of activists and dissidents, including the recent detention of Ngo Thi To Nhien, executive director of the Vietnam Initiative for Energy Transition.

Challenges for Foreign Companies

The case highlights the challenges faced by foreign companies investing in Vietnam, where corruption and human rights abuses are systemic and pervasive. As one expert noted, “All these companies say they are ‘de-risking’ their supply chains by moving out of China to Vietnam, but what are they really supporting? Companies with very fancy codes of conduct are investing in a country where human rights abuses are systematic and pervasive.”