Vietnamese billionaire sentenced to death for multi-billion fraud case

A real estate tycoon has been sentenced to death by a court in Ho Chi Minh City, southern Vietnam, in the country's biggest financial fraud case, state media reported.

Truong My Lan, 67, chairman of the Van Thinh Phat (VTP) real estate company, was accused of fraud amounting to $12.5 billion (£10 billion), almost 3% of the country's GDP. country in 2022.

Lan illegally controlled Saigon Joint Stock Commercial Bank between 2012 and 2022 to authorize 2,500 loans that resulted in losses of $27 billion (£22 billion) for the bank, state media VnExpress reported. The court asked him to compensate the bank $26.9 million (£21.5 million).

Despite mitigating circumstances – it was a first offence and Lan was involved in charity work – the court attributed its harsh sentence to the seriousness of the case, saying Lan was at the head of an orchestrated and sophisticated criminal enterprise that had serious consequences with no possibility of recovering the money, VnExpress said.

His actions “not only violate the property management rights of individuals and organizations, but also push SCB (Saigon Joint Stock Commercial Bank) into a state of special control, eroding the people's trust in the leadership of the party and state,” the judgment quoted as saying.

The 2011 merger of ailing SCB Bank involved two other lenders. The banks have since grown into one of Vietnam's largest commercial banks by assets.

Former central bank official Do Thi Nhan was also sentenced to life in prison on Thursday for accepting $5.2m (£4.1m) in bribes.

Lan's arrest in October 2022 was one of the most high-profile in an ongoing anti-corruption campaign in Vietnam, which has intensified since 2022.

The so-called Burning Furnace campaign has reached the highest echelons of Vietnamese politics, with former President Vo Van Thuong resigning in March after being implicated in the campaign.

But it is the scale of Lan's trial that has shocked the country, with VTP one of Vietnam's wealthiest real estate companies, working on projects including luxury residential buildings, offices, hotels and shopping malls.

Analysts said the scale of the scam raised questions about whether other banks or companies had made a similar mistake, dampening Vietnam's economic outlook and making foreign investors nervous at a time when the country is trying to position itself as the ideal home for companies trying to shift their supply chains away from China.

The real estate sector in Vietnam has been particularly affected.

An estimated 1,300 real estate companies have pulled out of the market in 2023, with developers offering discounts and gold as gifts to lure buyers, and despite a one-third drop in rents for shophouses (buildings that serve as both residence and business) in Ho Chi Minh City, many city centers are still empty, according to state media Thanh Nien.

In November, Communist Party General Secretary Nguyen Phu Trong, Vietnam's top politician, said the anti-corruption fight “will continue in the long term.”