Vietnamese real estate tycoon Truong My Lan is set to go on trial next month, along with 85 alleged accomplices, on charges of embezzling about $12.5 billion from Saigon Joint Stock Commercial Bank.
Lan faces a sentence of 20 years to life in prison or the death penalty if convicted. VOA was unable to contact Lan or her lawyers.
The corruption case is the largest instance of alleged financial fraud in the Southeast Asian nation’s history, and experts say it reveals weaknesses in Vietnam's banking sector that threaten the Communist Party's legitimacy.
"If we look at the big picture, it is about both fighting corruption and trying to improve transparency and the resilience of the banking system," Le Hong Hiep, senior fellow at Singapore's ISEAS-Yusof Ishak Institute, told VOA by Zoom on January 23.
"[Hanoi doesn't] want banks to collapse and people to lose money, because that will create a lot of social instability that may threaten the stability of the regime itself," he added.
Authorities say about 42,000 people have been caught up in the scheme, with many filing police reports and struggling to recover their money. The scheme has cost some their life savings.
The view down Nguyen Hue street in Ho Chi Minh City, where Truong My Lan owns multiple buildings, including the Times Square building in the distance.
Major General Nguyen Van Thanh, who heads an investigative unit within the police department, was quoted last month by Viet Nam News as saying that money recovered in the case would be considered evidence and given back to its rightful owners on orders by the court.
The case against Lan fits under the umbrella of General Secretary Nguyen Phu Trong's key initiative – his “Blazing Furnace" anti-corruption campaign, which began in 2016.
"The anti-corruption campaign is his highest priority because I think he wanted to rescue the Communist Party from decay," Alexander Vuving, professor at the Daniel K. Inouye Asia Pacific Center for Security Studies in Honolulu, told VOA. "He saw that cleaning up the party from corruption is one of the best ways, the most important ways, to rescue the party."
In 2011, Lan acquired three private banks and merged them into Saigon Joint Stock Commercial Bank, or SCB. She is accused of using SCB to finance her property developing firm, Van Thinh Phat, and taking out bad loans for the more than 1,000 "shadow businesses” affiliated with VTP. Lan was arrested October 8, 2022, on charges of bribery, banking regulation violations and embezzlement.
Hiep, at ISEAS, said more information regarding Lan’s political connections could be revealed during the trial.
“The problem is why it took [authorities] so long to crack this case even though it was quite well-known in the industry,” Hiep said. “If she got political protection from someone, that could have helped her avoid scrutiny or evade justice.”
Weak banking system
An indictment alleges that Lan owned 91.5% of SCB, despite not holding an official position at the bank. The indictment alleges that she had de facto control of the bank and used it to raise capital for the property development firm and its approximately 1,000 subsidiaries.
Lan was alleged to have siphoned money from SCB for more than a decade through her connections at the State Bank of Vietnam, the country’s central bank, according to local media reports based on Ministry of Public Security statements.
The reports said the ministry alleged Lan bribed all 24 central bank officials who were assigned to inspect SCB. The officials who allegedly accepted illicit payments to falsify records regarding VTP's bad debt include Do Thi Nhan, the former head of the State Bank, according to the reports. The ministry has recommended filing charges against Nhan, who allegedly accepted $5.2 million in bribes.
Court Chief Pham Ngoc Duy of the People's Court of Ho Chi Minh City told local news outlet VnExpress that security cameras and fire safety equipment have been installed at the courthouse to safeguard 2,500 files weighing in at approximately six tons.
Tran Anh Quan, a Ho Chi Minh City-based social activist, told VOA that the scandal has led to the public's "loss of confidence in the financial system and political system."
"After Ms. Lan was arrested, almost every week and every month, there were protests in front of SCB bank to demand the return of deposits. But it seems hopeless," Quan wrote in Vietnamese over the messaging app Telegram on January 19.
"Previously, Vietnamese people had the opinion that 'depositing money in the bank is the safest bet.' But now when I deposit money in the bank and lose it all, who dares to believe it anymore?" he added.
Zachary Abuza, Southeast Asia expert and professor at the National War College in Washington, told VOA that the scale of the case is "truly exceptional" and points to the likelihood of widespread instances of financial crime and the struggle regulators face to keep up with the country's economic development.