The Latest on Southeast Asia: March 14, 2024

On March 5, a landmark trial involving Vietnamese real estate developer Van Thinh Phat Holdings Group (VTP), officially commenced at the People’s Court of Ho Chi Minh City. At the center of the trial is real estate tycoon and VTP chairwoman Trương Mỹ Lan, accused of misappropriating $12.5 billion from the country’s largest bank, Saigon Joint Stock Commercial Bank (SCB), violating banking regulations and bribing government officials along the way. Lan joins 85 co-defendants who facilitated her embezzlement scheme, including 45 former SCB executives, 15 former State Bank of Vietnam officials, 3 Government Inspectorate officials, a former State Audit official, 2 Chinese nationals, and Lan’s husband, Hong Kong tycoon Eric Chu Nap-kee. Many of them, in addition to Lan, face the death penalty. 

Prosecutors allege that Lan used SCB, which she effectively controlled through domestic and foreign subsidiaries and proxies, to “finance [VTP’s] ecosystem.” Specifically, she coordinated with SCB and government officials to arrange illegal disbursements to VTP in the form of loans. They also allege that Lan and her associates paid nearly $5.2 million in bribes to cover up or facilitate these crimes, the largest sum ever recorded in the country’s history. 

This may be the largest financial fraud case ever in Asia, eclipsing Malaysia’s $4.5 billion 1MDB scandal in 2015. The $12.5 billion embezzled is the largest amount recorded in Vietnam, equivalent to around 3 percent of its GDP and larger than the market capitalization of all but one of its banks. The trial unfolds as Vietnam’s ruling Communist Party ramps up its anti-graft campaign, known locally as dot lo (“blazing furnace”). Waged by General Secretary Nguyen Phu Trong since 2016, dot lo has led to the disciplining of approximately 200,000 party members across all levels of government. 

The campaign has picked up steam since 2021 as more senior officials have fallen victim to anti-corruption efforts, most notably then-president Nguyen Xuan Phuc in January 2023. Since 2021, dot lo has led to 7,500 individuals criminally investigated and over 4,400 indictments in more than 1,700s graft cases. In 2023 alone, the number of graft defendants doubled to 2,079. Business leaders like Lan are becoming the faces of the increasingly public campaigns. 

As Vietnam’s anti-graft campaign comes to dominate every level of politics and all sectors of the economy, experts have expressed concerns about its adverse economic consequences. Disruptions to healthcare, automotive, and real estate sectors and related supply chains have been widely reported, as “increasing uncertainty and anxiety” have spread among those in the private and public sectors, afraid of violating poorly written or unclear regulations. Moreover, the social impact and magnitude of the associated public fallout from the VTP case are unprecedented and could have implications for Vietnamese society. Police have so far identified nearly 42,000 fraud victims, and protestors have rallied in cities including Hanoi and Ho Chi Minh City, where public dissent is ordinarily tightly controlled. 

Angus Lam is a research intern with the Southeast Asia Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Japhet Quitzon is a research associate with the Southeast Asia Program at CSIS.

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Angus Lam

Research Intern, Southeast Asia Program