23-11-2023 (HANOI) Vietnam’s commitment to the ongoing fight against corruption has been reiterated by the country’s top leader, promising an extension of the campaign “for the long term.” This announcement comes in the wake of police revelations regarding financial scandals in the real estate sector, amounting to over three per cent of the gross domestic product (GDP).
Although the anti-corruption campaign has been in progress since 2016, it gained significant momentum last year when authorities in the Communist-ruled nation clamped down on high-profile frauds and corruption cases involving corporate executives and state officials.
Communist Party’s General Secretary Nguyen Phu Trong emphasized the need for a faster and more efficient anti-corruption fight. “We won’t stop here, but will continue for the long term,” Trong stated, according to reports from state media.
Trong’s comments followed the police unveiling the results of extensive investigations into two financial scandals, exposing the magnitude of the fraud, estimated at a combined US$12.8 billion (S$17.14 billion) or 3.2 per cent of the economy.
In the larger of the two scandals, Truong My Lan, chairwoman of real estate developer Van Thinh Phat Holdings Group, and her accomplices were found to have embezzled 304 trillion dong (S$16.78 billion) from Saigon Joint Stock Commercial Bank. The investigation’s findings were made public on Sunday (Nov 19), shedding light on a case that had triggered a crisis in the real estate sector and the corporate bond market.
The anti-graft campaign, aptly named the “blazing furnace,” reminiscent of similar campaigns in neighbouring China, has compounded the negative economic impact of the scandal. Routine transactions have been paralyzed as officials fear becoming entangled in investigations.
The revelation of the scandal’s vast scale this week has raised concerns among financial experts about its impact on the banking sector. J.P. Morgan Research suggested that the size of the scandal might prompt stricter enforcement of financial rules, resulting in higher costs for lenders and potentially slowing growth.
In September, the Asian Development Bank had already warned of possible spillover effects into banking from the real estate crisis, as the ratio of non-performing loans increased.
Adding to the economic concerns, a rating agency co-owned by Moody’s reported that Vietnam’s listed property developers are facing increased pressure to settle large debts as profits decline, and cash reserves hit the lowest levels in over five years.
In an unrelated scandal, police late on Wednesday accused the chairman of property developer Tan Hoang Minh Group of illegally raising 8.6 trillion dong from issuing bonds to 6,600 investors. This revelation marks the first time the scale of the scandal has been disclosed, adding to the challenges faced by the Vietnamese economic landscape.
