Vietnamese property magnate receives death penalty for historic fraud

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Truong My Lan

11th April 2024 – (Hanoi) Truong My Lan, a leading figure in the nation’s real estate landscape, has been condemned to death by a court in Ho Chi Minh City. Lan, 67, who presided over the Van Thinh Phat group, was found guilty of orchestrating a fraudulent scheme that caused a staggering loss of $12.5 billion, equating to nearly 3% of Vietnam’s GDP in 2022.

The gravity of the crime, described as the most substantial financial fraud in Vietnamese history, was underscored by the court’s decision on Thursday, reported by Vietnam Net. Despite being a first-time offender and known for her philanthropic endeavors, Lan’s fraudulent activities were deemed too severe for leniency; she was the mastermind behind a vast criminal network that inflicted irreparable damage on the financial integrity of the country.

Over a decade, from 2012 to 2022, Lan maintained illicit control over the Saigon Joint Stock Commercial Bank (SCB), facilitating approximately 2,500 unsanctioned loans, culminating in losses of $27 billion for the institution. According to VnExpress, the court has ordered Lan to repay $26.9 million in compensation to the bank.

The magnitude of Lan’s fraud was further highlighted by the court’s statement, which VnExpress quoted: “Her actions did not only undermine the property rights of individuals and organisations but also severely compromised the SCB, eroding public confidence in the governance of the Party and State.”

Truong Hue Van, Lan’s niece and CEO of Van Thinh Phat, received a 17-year prison sentence for her complicity in the criminal activities.

The Van Thinh Phat group, established after Vietnam transitioned from a centrally-planned economy to a more market-oriented system that welcomed foreign investment, became a titan in the Vietnamese property market. Lan, initially assisting her mother in selling cosmetics, leveraged her business acumen to build an empire that included high-end residential complexes, business centres, and shopping malls.

However, the court found that Lan exploited her significant influence over SCB to siphon funds through a network of phantom companies. She allegedly owned over 90% of the bank and was involved in the approval of loans that eventually circled back to her companies, a claim she denied.

Adding to the scandal, a former central bank official, Do Thi Nhan, was handed a life sentence for accepting $5.2 million in bribes, highlighting the depth of corruption within the case.

Lan’s arrest in October 2022 was part of Vietnam’s broader anti-corruption initiative, dubbed the Blazing Furnace campaign, which has reached the upper echelons of Vietnamese politics, leading to the resignation of former President Vo Van Thuong in March amid allegations.

The trial has raised concerns about the potential for similar malfeasance in other financial institutions, casting a shadow over Vietnam’s economic landscape and creating unease among international investors. The property sector has been particularly hard hit, with numerous firms exiting the market in 2023, significant discounts being offered to entice buyers, and a noticeable downturn in occupancy rates for commercial properties in Ho Chi Minh City.