Truong My Lan Vietnamese billionaire sentenced to death for banking fraud that saw her stealing over $12.5 billion through bribes, fraud, embezzling and open deceit. How a former market stall vendor was able to perpetrate her crime and why it took so long before she was brought to justice.
A top Vietnamese property tycoon who was convicted of swindling billions of dollars has been sentenced to death for perpetrating one of the biggest bank frauds in history.
Truong My Lan, chair of major developer Van Thinh Phat, was accused of fraud amounting to $12.5 billion – nearly 6 per cent of the country’s 2023 GDP as she ongoing siphoned money through a series of sophisticated channels meant to hide her involvement.
She illegally controlled the Saigon Joint Stock Commercial Bank (SCB) between 2012 to 2022 to funnel funds through thousands of ghost companies and by paying bribes to government officials allowing her carte blanche as she embezzled funds.
Vietnamese billionaire sentenced to death
The death sentencing is one of the rarest punishments ever bequeathed for a white collar crime which follows Tran being found guilty of embezzlement, bribery and violating banking regulations involving SCB.
As part of her punishment, Lan is required to return $27bn, a sum prosecutors said may never be recovered according to the BBC.
But perhaps the most pressing question legislators and a gobsmacked public came to wonder, is how exactly was the real estate investor able to commit such unparalleled degrees of fraud with such vast sums of money for so long without being caught?
Investigators claim that Lan, 67, used more than 1,000 domestic and foreign shell companies that were set up under the property company, Van Thinh Phat Group (VTP).
Lan’s ascent was a dizzy one, she had previously 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.
Abuse of power and authority
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. The plan had been orchestrated by Vietnam’s Central 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.
Willing accomplices all the way to the top of the food chain
Lan is accused of using SCB bank as her cash cow, illegally controlling it between 2012 to 2022, and using thousands of ‘ghost companies’ in Vietnam and abroad to give loans to herself and her allies, according to government documents.
These loans resulted in losses of $27 billion, state media VN Express reported.
She was accused of ‘handsomely’ paying bribes to government officials to make sure her loans were never scrutinized- including a former central official who was sentenced to life in prison for taking $5.2 million in bribes – and violating banking regulations, government documents said.
The court sentenced her to death saying that her actions ‘not only violate the property management rights of individuals but also pushed SCB into a state of special control, eroding people’s trust in the leadership of the (Communist) party and State.’
The total value of the assets linked to real estate group VTP and its affiliates is estimated at between $12billion and $48billion, according to investigators and an estimate from market appraisal firm Hoang Quan.
Personal non stop ATM machine
Investigators also claimed that Lan and her accomplices used the Saigon Commercial Bank, of which she has been the majority shareholder since 2012, as their personal ATM.
Vietnam’s Ministry of Public Security said Lan’s alleged violations were ‘extremely elaborate, meticulous, with detailed and carefully prepared scripts.’
The scam was only uncovered in 2023 when President Nguyen Xuan Phuc and two deputy prime ministers were forced to step down, for ‘violations and wrongdoings’ related to pandemic-era corruption scandals.
It was only there that the Vietnamese government was able to piecemeal the level of vast deceit that had been orchestrated over the last dozen years.
Lan’s trial comes as part of a broader crackdown on corruption by Vietnam’s communist government.
Lan’s subsequent trial was part of the ‘Blazing Furnaces’ anti-corruption campaign, which was created by the Communist Party Secretary-General, Nguyen Phu Trong, in 2016.
Reported the BBC: ‘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.’
Trong previously said that ‘a country without discipline would be chaotic and unstable…we need to balance democracy and law and order’.
Former President Vo Van Thuong resigned in March after being implicated in the campaign. Soon hundreds of other officials were disciplined or jailed as the level of corruption and fraud was uncovered.
As chairman of the SCB, Dinh Van Thanh approved 479 loans worth VND422 trillion including interest as of October 2022 that went to Lan for using for her own purposes.
Former deputy CEO Chiem Minh Dung also approved a further 362 loans worth VND218 trillion, which caused losses of VND140.7 trillion.
Power grab by Vietnam’s Communist party to re-assert control
Serving as SCB chairwoman, Nguyen Thi Thu Suong helped Lan by allowing her to purchase a 30% stake from a Singaporean shareholder in De Nhat Bank, one of the three lenders Lan merged together to create SCB in the first place.
While Lan ostensibly did not have direct executive power at the bank, she owned 91.5% of its shares through other people according to the dailymail.
In the decade from 2012 to 2022, her closest accomplices took more than 2,500 loans at SCB – a sum worth more than VND1 quadrillion ($44billion) – which equated to 93% of the bank’s total loans issued during that period.
That sum is equivalent to 10.7% of Vietnam’s 2022 GDP of $409 billion. As a result, Lan and her accomplices caused losses to SCB worth an estimated VND498trillion.
Lan’s embezzlement of $12.5 billion equals about three per cent of Vietnam’s total GDP for 2023.
Lam will appeal the verdict, a family member told reporters before it was issued.
The vast convictions, including Lan’s according to analysts will likely help the Communist party regain control of how things are done in the country after it was revealed a vast array of private actors had openly carried out the deceit (as the price of admission) as the communist government will seek to re-assert itself over the private market and regain the public’s confidence if it is to stay in power.
