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TRUONG MY LAN: VIETNAMESE BILLIONAIRE SENTENCED TO DEATH FOR $44BN FRAUD

11 April 2024
By Jonathan Head & Thu Bui,In Bangkok
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EPA
Truong My Lan is accused of looting one of Vietnam's largest banks over a period
of 11 years

It was the most spectacular trial ever held in Vietnam, befitting one of the
greatest bank frauds the world has ever seen.

Behind the stately yellow portico of the colonial-era courthouse in Ho Chi Minh
City, a 67-year-old Vietnamese property developer was sentenced to death on
Thursday for looting one of the country's largest banks over a period of 11
years.

It's a rare verdict - she is one of very few women in Vietnam to be sentenced to
death for a white collar crime.

The decision is a reflection of the dizzying scale of the fraud. Truong My Lan
was convicted of taking out $44bn (£35bn) in loans from the Saigon Commercial
Bank. The verdict requires her to return $27bn, a sum prosecutors said may never
be recovered. Some believe the death penalty is the court's way of trying to
encourage her to return some of the missing billions.

The habitually secretive communist authorities were uncharacteristically
forthright about this case, going into minute detail for the media. They said
2,700 people were summoned to testify, while 10 state prosecutors and around 200
lawyers were involved.



The evidence was in 104 boxes weighing a total of six tonnes. Eighty-five others
were tried with Truong My Lan, who denied the charges and can appeal.

All of the defendants were found guilty. Four received life in jail. The rest
were given prison terms ranging from 20 years to three years suspended. Truong
My Lan's husband and niece received jail terms of nine and 17 years
respectively.

"There has never been a show trial like this, I think, in the communist era,"
says David Brown, a retired US state department official with long experience in
Vietnam. "There has certainly been nothing on this scale."

The trial was the most dramatic chapter so far in the "Blazing Furnaces"
anti-corruption campaign led by the Communist Party Secretary-General, Nguyen
Phu Trong.

A conservative ideologue steeped in Marxist theory, Nguyen Phu Trong believes
that popular anger over untamed corruption poses an existential threat to the
Communist Party's monopoly on power. He began the campaign in earnest in 2016
after out-manoeuvring the then pro-business prime minister to retain the top job
in the party.


Getty Images
Communist Party General Secretary Nguyen Phu Trong is leading an anti-corruption
campaign

The campaign has seen two presidents and two deputy prime ministers forced to
resign, and hundreds of officials disciplined or jailed. Now one of the
country's richest women has joined their ranks.

Truong My Lan comes from a Sino-Vietnamese family in Ho Chi Minh City, formerly
Saigon. It has long been the commercial engine of the Vietnamese economy, dating
well back to its days as the anti-communist capital of South Vietnam, with a
large, ethnic Chinese community.

She started as a market stall vendor, selling cosmetics with her mother, but
began buying land and property after the Communist Party ushered in a period of
economic reform, known as Doi Moi, in 1986. By the 1990s, she owned a large
portfolio of hotels and restaurants.

Although Vietnam is best known outside the country for its fast-growing
manufacturing sector, as an alternative supply chain to China, most wealthy
Vietnamese made their money developing and speculating in property.



All land is officially state-owned. Getting access to it often relies on
personal relationships with state officials. Corruption escalated as the economy
grew, and became endemic.

By 2011, Truong My Lan was a well-known business figure in Ho Chi Minh City, and
she was allowed to arrange the merger of three smaller, cash-strapped banks into
a larger entity: Saigon Commercial Bank.

Vietnamese law prohibits any individual from holding more than 5% of the shares
in any bank. But prosecutors say that through hundreds of shell companies and
people acting as her proxies, Truong My Lan actually owned more than 90% of
Saigon Commercial.

They accused her of using that power to appoint her own people as managers, and
then ordering them to approve hundreds of loans to the network of shell
companies she controlled.

The amounts taken out are staggering. Her loans made up 93% of all the bank's
lending.


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According to prosecutors, over a period of three years from February 2019, she
ordered her driver to withdraw 108 trillion Vietnamese dong, more than $4bn
(£2.3bn) in cash from the bank, and store it in her basement.

That much cash, even if all of it was in Vietnam's largest denomination
banknotes, would weigh two tonnes.

She was also accused of bribing generously to ensure her loans were never
scrutinised. A former chief inspector at the central bank was given a life
sentence for accepting a $5m bribe.

The mass of officially sanctioned publicity about the case channelled public
anger over corruption against Truong My Lan, whose fatigued, unmade-up
appearance in court was in stark contrast to the glamorous publicity photos
people had seen of her in the past.



But questions are also being asked about why she was able to keep on with the
alleged fraud for so long.

Getty Images
The trial took place in Ho Chi Minh City, where Saigon Commercial Bank was based

"I am puzzled," says Le Hong Hiep who runs the Vietnam Studies Programme at the
ISEAS - Yusof Ishak Institute in Singapore.

"Because it wasn't a secret. It was well known in the market that Truong My Lan
and her Van Thinh Phat group were using SCB as their own piggy bank to fund the
mass acquisition of real estate in the most prime locations.

"It was obvious that she had to get the money from somewhere. But then it is
such a common practice. SCB is not the only bank that is used like this. So
perhaps the government lost sight because there are so many similar cases in the
market."



David Brown believes she was protected by powerful figures who have dominated
business and politics in Ho Chi Minh City for decades. And he sees a bigger
factor in play in the way this trial is being run: a bid to reassert the
authority of the Communist Party over the free-wheeling business culture of the
south.

"What Nguyen Phu Trong and his allies in the party are trying to do is to regain
control of Saigon, or at least stop it from slipping away.

"Up until 2016 the party in Hanoi pretty much let this Sino-Vietnamese mafia run
the place. They would make all the right noises that local communist leaders are
supposed to make, but at the same time they were milking the city for a
substantial cut of the money that was being made down there."

At 79 years old, party chief Nguyen Phu Trong is in shaky health, and will
almost certainly have to retire at the next Communist Party Congress in 2026,
when new leaders will be chosen.

He has been one of the longest-serving and most consequential
secretary-generals, restoring the authority of the party's conservative wing to
a level not seen since the reforms of the 1980s. He clearly does not want to
risk permitting enough openness to undermine the party's hold on political
power.



But he is trapped in a contradiction. Under his leadership the party has set an
ambitious goal of reaching rich country status by 2045, with a technology and
knowledge-based economy. This is what is driving the ever-closer partnership
with the United States.

Yet faster growth in Vietnam almost inevitably means more corruption. Fight
corruption too much, and you risk extinguishing a lot of economic activity.
Already there are complaints that bureaucracy has slowed down, as officials shy
away from decisions which might implicate them in a corruption case.

"That's the paradox," says Le Hong Hiep. "Their growth model has been reliant on
corrupt practices for so long. Corruption has been the grease that kept the
machinery working. If they stop the grease, things may not work any more."


VIETNAM'S PRESIDENT OUT AFTER JUST YEAR IN OFFICE


WHY STARBUCKS CANNOT CRACK COFFEE-LOVING VIETNAM


POWER SHIFT IN VIETNAM AS PRESIDENT QUITS

Vietnam
Asia

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