Vietnam’s Largest Bank Fraud: Property Developer Truong My Lan Sentenced to Death
In a landmark trial that has stunned Vietnam, Truong My Lan, a 67-year-old Vietnamese property developer, was sentenced to death on Thursday, January 27, 2022, for orchestrating a $44bn (£35bn) loan fraud at one of the country’s largest banks, Saigon Commercial Bank (SCB). The trial took place at the Ho Chi Minh City Court and marked the first time a woman has received the death penalty for a white-collar crime in the country’s communist era.
The Verdict
Truong My Lan, who was dressed in plain clothes, listened impassively as the verdict was read out in front of a packed gallery, including national and international media. The ruling came after an 11-year-long criminal investigation which involved thousands of witnesses and tons of evidence.
The Fraud
Prosecutors accused Truong My Lan of using complex networks of shell companies and proxies to control the bank’s management and order hundreds of fraudulent loans, affecting an estimated 2,700 people and leading to the largest-ever trial in Vietnam.
- Affected an estimated 2,700 people
- Complex networks of shell companies and proxies
- Hundreds of fraudulent loans
The Evidence and Witnesses
A record number of witnesses were summoned to the trial, including 10 state prosecutors and over 200 lawyers. The evidence against Truong My Lan was presented in 104 boxes, weighing a total of six tonnes.
The Sentencing of Others
Besides Truong My Lan, 85 other suspects were tried in the case. Four received life sentences, while the rest received prison terms ranging from 20 years to three years suspended.
The husband and niece of the accused were also sentenced, receiving jail terms of nine and 17 years, respectively.
The Context
David Brown, a former US State Department official with long experience in the country, stated, “There has never been a trial like this, nor on this scale, in Vietnam’s communist era.” The authorities’ openness about the trial is seen as a sign of the government’s determination to crack down on rampant corruption.
Vietnam’s Anti-Corruption Campaign
Vietnam’s Communist Party General Secretary Nguyen Phu Trong had spearheaded a nationwide anti-corruption campaign, the “Blazing Furnaces,” which had already resulted in the resignation of several high-ranking officials. This trial represents a significant milestone in the campaign.
Truong My Lan’s Background
Truong My Lan, a wealthy businesswoman, started as a market vendor before venturing into real estate development following the 1986 economic reforms. By the 1990s, she had amassed a fortune in hotels, restaurants, and speculative investments, mainly in property. However, some allege that her wealth was built on corrupt relationships with state officials.
The Role of SCB
SCB is just one of several banks that have reportedly been used to fund real estate speculation in the country. Most of Vietnam’s wealthiest individuals have made their money in the property sector, and many have relied on personal connections to access state-owned land. Corruption has become deeply ingrained in the Vietnamese economy due to the intertwined business-political relationships.
The Investigation and Exposure of the Fraud
The fraud was initially exposed following a thorough investigation, which included the discovery of bribes paid to officials to overlook suspicious activities. One former Chief Inspector at the Central Bank was given a life sentence for accepting a $5m bribe during the case.
The Significance of the Trial
Despite public outrage over the corruption scandal, questions remain about why Truong My Lan was able to continue the fraud for such a long time. Le Hong Hiep, who runs the Vietnam Studies Programme at the ISEAS-Yusof Ishak Institute in Singapore, believes that Truong My Lan’s fraud had become commonplace, and that the authorities may have lost sight of her illegal activities due to the prevalence of similar cases in the market.
The Powerful Figures and Ho Chi Minh City’s Culture
Another theory suggests that powerful figures in the southern business and political arena protected Truong My Lan, allowing her to carry out her fraud for years. Retired US State Department official David Brown believes that this trial represents a bid by the Communist Party to reassert its control over Ho Chi Minh City’s free-wheeling business culture.
Nguyen Phu Trong’s Legacy
As Communist Party General Secretary Nguyen Phu Trong, who is 79 years old, prepares for retirement, this trial might be his last major effort to regain control over the city that he and his allies in the party have allowed to slip away from their grasp for decades.