HANOI, Vietnam (AP) – Real estate tycoon Truong My Lan faces the death penalty on charges of fraud totaling $12.5 billion in a trial that began Tuesday. This is equivalent to nearly 3% of Vietnam's gross domestic product (GDP) in 2022 and is the largest financial fraud case in Vietnam's history.
Real estate company chairman Van Tinh Phat, 66, allegedly used “thousands of ghost companies” to pay bribes to government officials and violate banking regulations, according to government documents. She is suspected of illegally controlling Saigon Joint Stock Commercial Bank from 2012 to 2022 and using it to embezzle $12.5 billion, the document added.
A further 85 people have been indicted in this connection, including a former National Bank of Vietnam official accused of accepting $5.2 million in bribes. Mr. Lan will be arrested in October 2022 and could be sentenced to death if found guilty.
State media outlet VN Express reported that she was escorted to court by authorities around 7 a.m., while her husband, Eric Chu Nap-kee, who works in the real estate industry in Hong Kong, was also summoned. VTP is one of the wealthiest real estate companies in Vietnam, and its projects include luxury residential buildings, offices, hotels, and shopping centers.
Lan's arrest is one of the most high-profile arrests in Vietnam's ongoing anti-corruption campaign, which has gained momentum since 2022. Thousands of government officials and business executives are under investigation in the so-called “Burning Furnace” movement. The issue reached the highest echelons of Vietnam's government in January 2023, when former President Nguyen Xuan Phuc and two deputy prime ministers resigned, citing “political responsibility” for corruption scandals during the pandemic.
But analysts say anti-corruption moves have also worsened Vietnam's economic outlook, with foreign investors at a time when the Southeast Asian country is positioning itself as an ideal base for companies looking to move supply chains out of China. He added that it was making him anxious.
Linh Nguyen, principal analyst at consultancy Control Risks, said what was surprising was the scale of Mr Lan's alleged fraud. Lang is suspected of making $44 billion in loans to himself and his allies between 2012 and 2022, and VN Express said documents related to the case weighed 6 tons. It is said to reach.
“More than 3% of GDP is huge,” Nguyen said, adding that it raised questions about whether other banks and companies “have done the same thing[and]just haven't been discovered.”
According to a report by Singapore's ISEAS-Yusof Ishak Institute, anti-corruption efforts have also stagnated Vietnam's bureaucracy by making “public officials fearful of being investigated and avoiding responsibility.” It is said that there is. The clearest evidence of this is the slow rate of public investment spending. As of October 2023, more than 55% of the annual budget has been used up, and $10.19 billion needs to be disbursed within 35 days, state media Vietnam News reported. These are funds needed for development projects, from bridges to highways to airports, and if not spent on time, there will be significant delays.
Nguyen said investors, especially those in banking, finance and real estate, are now more cautious. “Right now it's a 'let's wait and see' situation for investors,” she said.
Vietnam's real estate sector has been particularly hard hit, with an estimated 1,300 real estate companies exiting the market in 2023 and developers offering discounts and gold gifts to attract buyers. Despite rents for shophouses falling by a third, much of the city center remains empty, according to state media.
Vietnam's economic growth slowed to 5.05% last year from 8.02% in 2022 due to weak global demand and slowing public investment, according to government data.
Vietnam's top politician, Communist Party General Secretary Nguyen Phu Trong, said in November that the fight against corruption will “continue for a long time.” Around that time, Vietnamese authorities announced that they were investigating two other cases related to Lan's real estate company, alleging money laundering overseas through real estate.
