The fraud trial of a Vietnamese real estate tycoon who allegedly misappropriated $12bn started on Tuesday, as part of the country’s largest corruption case that has also ensnared officials from the central bank and government.
Truong My Lan faces a death sentence or imprisonment if found guilty in the graft case, which has rocked the property and corporate bond markets of one of the world’s fastest-growing economies.
The graft case is part of a corruption crackdown launched by Vietnam’s Communist party that has resulted in the arrests of hundreds of senior government officials, including cabinet ministers. Lan, developer Van Thinh Phat Group’s chair, is the most prominent businessperson to face graft allegations.
Vietnam has been one of the biggest beneficiaries of manufacturers seeking to diversify their supply chains beyond China as geopolitical tensions between Washington and Beijing rise. However, the Vietnamese economy grew 5.05 per cent in 2023, missing the government’s official target, as overseas demand slowed.
The anti-corruption campaign has slowed down project approvals by the government, and more state scrutiny of private businesses could hurt investor confidence, analysts said.
Lan, 67, comes from one of Vietnam’s richest families who made their fortune in property. She has been charged with bribery, embezzlement, abuse of power and “lack of responsibility causing serious consequences”, according to state media.
She has denied wrongdoing, state media reported. Lawyers for Lan, who was arrested in 2022, did not respond to a request for comment.
Lan is accused by Vietnamese authorities of using Saigon Joint Stock Commercial Bank (SCB), in which she owns a controlling stake of about 90 per cent, to funnel 304tn dong ($12.3bn) to her real estate company Van Thinh Phat.
Loans worth more than $44bn were given by SCB to Van Thinh Phat and related companies between 2012 and 2022, accounting for 93 per cent of the total loans disbursed by the bank.
Authorities also said Van Thinh Phat used allegedly fake companies to sell corporate bonds through SCB to the bank’s depositors.
In addition to Lan, 85 people — including 15 officials from Vietnam’s central bank — are charged in connection with the case. The central bank officials are accused of receiving bribes from Lan to cover up the alleged fraud.
“The trial is important in terms of scale and because it signals that the [Communist] party is willing to expand its anti-corruption campaign to the private sector despite potential risks that it might have on the economy,” said Nguyen Khac Giang, a visiting fellow at Singapore’s Iseas-Yusof Ishak Institute.
He said Lan’s corruption case had dented the confidence of some private businesses in Vietnam worried about the risks of operating in the country and the state companies they work with.
The anti-corruption campaign has also made government officials hesitant to approve projects, he added, out of fear that they could be implicated in graft.