Vietnam tycoon sentenced to death

Truong My Lan, 67, real estate tycoon, has been sentenced to death on Thursday for fraud amounting to $12.5 billion. Vietnam, like China, is a communist party-ruled state, which embraced market economy. The economic liberalisation in Vietnam began in 1992, and three decades and more later, Vietnam is poised to become a strong global player. Americans have found in Vietnam a good counter to China, and there has been serious talk of shifting American businesses from China to Vietnam. Americans were also keen to increase investments in the country. But the Vietnam Communist Party has been fighting a serious battle against corruption, and the party’s top leader Nguyen Phu Trong has been driving the anti-corruption drive called Blazing Furnace. Last month, the country’s president Vo Van Thuong resigned for allowing corruption when he was holding an important position at the provincial level. On Thursday, Do Thin Nhan, former central bank official, was sentenced to 17 years in prison, for accepting bribes of $.5.2 billion.

There is a view that the death sentence against My Lan was much too harsh because she is a first-time offender and that she was involved in charity work. But the court observed that her actions “not only violate the property managements rights of individuals and organisations but also push SCB (Saigon Commercial Bank Joint Stock Company) into a state of special control; eroding people’s trust in the leadership of Party and State.”

My Lan enabled the merger of two lenders with the SCB, which was in trouble, with the help of the central bank in 2011, and she had 90 per cent control of the enlarged entity. She was already heading the real estate firm, Van Thin Phat, which was dominating the market. Van Thin Phat build luxury residential buildings, hotels, offices and shopping centres. She used her preeminent position as realtor to engage in the financial fraud through the SCB. And she was helped in this by her niece, Truong Hue Van, chief executive of Van Thin Phat. Hue Van has been sentenced to 17 years in prison for her role in the fraud.

My Lan began on a humble note, helping her mother, a Chinese businesswoman, to sell cosmetics in Ho Chi Minh City, formerly Saigon in south Vietnam, in its oldest market. It would seem that like in China, the Communist Party of Vietnam did not object to the emergence of tycoons but it realises that corruption would undermine the efficiency of the market system, and the success of capitalism is based on rules and trust.

It is indeed the case that the guarantors of the fairness of the market system are with the communist party and its government. Many critics are sure to point to the irony of the communist party, which is supposed to represent the working class, should support a class of tycoons, who usually belong to the bourgeois class. The communists have considered the bourgeoisie as the enemy of the workers.

The unwritten rule of the communist leaders then seems to be that the middle class tycoons have to remain within bounds, and they cannot violate the law because they are rich. They may be rich, but in a communist state they are not powerful. The case of My Lan is attracting attention because she is a woman, but does go beyond the issue of her gender.

The party leaders know that as Vietnam is not a politically open society which perhaps could have prevented large-scale corruption of the My Lan kind, they feel that harsh punishment is the only deterrent to potential offenders. The issue of corruption perhaps goes deeper. Perhaps, a controlled market system could be a cause of corruption.