Analysis by Philip J. Heijmans | Bloomberg
The Vietnamese flag flies atop the Hanoi Stock Exchange (HNX) in Hanoi, Vietnam, on Monday, Sept. 10, 2018. Vietnam has averaged economic growth of 6.3 percent between 2005 and 2017, multiplying its per capita income six-fold to $2,385 last year from $396 in 2000, according to data from General Statistics Office in Hanoi. Photographer: Maika Elan/Bloomberg (Bloomberg)
washingtonpost – January 11, 2023 at 5:42 p.m. EST
Vietnam’s Communist Party chief Nguyen Phu Trong has likened his anti-graft campaign to a “blazing furnace,” one that’s caught hundreds of senior officials, business executives and others in its blast over the years. While the country’s position has improved by more than 30 spots over the past decade on a global corruption perception index, it was still at 87th place out of 180 ranked in 2021. Now as Southeast Asia’s fastest-growing economy seeks to bolster its appeal as a destination for foreign investment in the midst of mounting trade tensions between the US and China, the fight seems to be flaring again.
1. What is Vietnam targeting?
Trong, who won a rare third term in 2021, said in a televised speech that “each party cadre and member needs to shoulder the responsibility of being a role model. The higher the position and rank, the more responsibility one must take.” Eight inspection teams have been set up to deal with corruption cases, including at party committees and agencies, according to the Central Steering Committee on Anti-Corruption.
2. Who’s in the crosshairs?
Authorities last year initiated criminal investigations of at least 4,646 individuals in about 2,474 cases for alleged corruption, abuse of power and economic wrongdoing. The Politburo and the party have disciplined around 70 officials, including five ministers and former ministers, since early 2021. Police have also detained a number of executives as part of investigations into alleged fraud tied to corporate bond issuance and equity trading and stock price manipulation. Here are some instances:
• Parliament dismissed two deputy prime ministers on Jan. 5 based on what Prime Minister Pham Minh Chinh said was their own request. They were the most senior officials to be relieved of duty since 2017. No reason was given but each of the men had had an assistant detained in corruption cases. One of them was booked for suspected collusion with a maker of Covid-19 test kits, and another for alleged bribery related to repatriation flights for Vietnamese during the pandemic.
• On the same day, police detained Tran Viet Thai, former ambassador to Malaysia, for alleged abuse of power as part of the investigation involving repatriation flights.(Vietnam organized about 2,000 during the pandemic.) Since the probe started in early 2022, officials have initiated criminal proceedings against 40 people, including Vu Hong Nam, ex-envoy to Japan; deputy foreign affairs minister To Anh Dung; a deputy prime minister’s assistant and a director of the Government Office’s department of international relations.
• In October, police detained Truong My Lan, chairwoman of the real estate conglomerate Van Thinh Phat Holdings Group, and three other company officials for alleged fraud involving the issuance and trading of corporate bonds. The detention led to a brief run on the privately held Saigon Commercial Bank because of its perceived connections with the group. Regulators placed the bank under “special scrutiny” and directed four others to help manage it.
• In June, police detained former Health Minister Nguyen Thanh Long and former Hanoi Mayor Chu Ngoc Anh for alleged ties to the investigation involving Covid tests. Officials have initiated criminal proceedings against 102 individuals tied to the case, according to the public security ministry.
• A former deputy health minister was sentenced in May to four years in prison for his role in a trading ring for counterfeit medicine.
• The Finance Ministry fired State Securities Commission Chairman Tran Van Dung in May for alleged “serious wrongdoings,” amid an investigation into stock trading. Soon after the head of the Ho Chi Minh City bourse was fired for what the Vietnam Stock Exchange called “very serious” shortcomings. Among the executives who were detained are the former chairman of Bamboo Airways and its parent FLC Group JSC, Trinh Van Quyet; Tri Viet Securities former chief executive officer Do Duc Nam and Louis Holdings former chairman Do Thanh Nhan.
• Prime Minister Chinh last year ordered ministries to increase scrutiny over the corporate bonds market amid the detention of Tan Hoang Minh Group chairman Do Anh Dung and six other company executives for investigation of alleged fraud. Dung and allies allegedly appropriated more than 8 trillion dong from more than 6,000 investors through the issuance of corporate bonds, according to the public security ministry.
3. What’s at stake?
The party has warned that corruption could put its legitimacy with the public and hold on power at risk — echoing President Xi Jinping in neighboring, communist China. Aside from that, Vietnam, a country of roughly 100 million people, has much to gain economically if it can bolster its image as place to do business. Vietnam has benefited as big manufacturers have been exploring ways to diversify supply chains away from China, which was caught up in pandemic lockdowns, and a trade war with the US. Vietnam’s exports are equivalent to more than 100% of GDP, according to World Bank data, making it one of the most trade dependent countries in the world. Vietnam has also been seeking to have its stock market classified as emerging market — up from the current frontier status, which is the lowest and riskiest rung — and this could bring greater foreign investment. As a participant in the US’s new Indo-Pacific Economic Framework, Vietnam also has an opportunity to increase its links to its former wartime foe — its largest export market.
4. How serious is the crackdown?
People are sitting in jail, and some have been sentenced to death. In the first six months of 2022, at least 295 party members were disciplined due to corruption and deliberate wrongdoings, according to a statement of an August meeting of the central anti-corruption committee. Civil judgment enforcement agencies had recovered more than 9 trillion dong ($383 million) in major cases in same period. (In 2021 the committee reported prosecuting 390 graft cases and recovering at least $400 million in assets.) But in Vietnam’s closely controlled, one-party state, motivation is difficult to assess. Human rights groups repeatedly accuse the government of tamping down dissent. Freedom House, a US-based advocacy group, ranks Vietnam as “not free,” with a 2021 score of only 19 points out of 100. Transparency International, a Berlin-based anti-corruption group, gave it a score of 39 out of 100 in 2021, from 31 in 2012 — the year then-premier Nguyen Tan Dung’s government was tainted by a series of scandals. Arrests picked up again after a new administration took power in 2016:
• Nguyen Xuan Anh, party chief in the central city of Danang, was removed from his post.
• Nguyen Xuan Son, former chairman of state-owned PetroVietnam and the ex-chief executive of Ocean Commercial Joint Stock Bank, was sentenced to death after being convicted for embezzlement.
• Ha Van Tham, the bank’s former chairman, was given a life sentence after being found guilty of the same charges.
• Former politburo member Dinh La Thang, another former PetroVietnam chairman, was sentenced in 2018 to 18 years for violating state regulations.
5. Will there be more?
The campaign is showing no signs of slowing. Anti-corruption steering committees have been formed and operate in every city and province, while a national steering committee is developing an anti-corruption strategy through 2030. Party chief Trong, in a November speech, continued urging officials to be persistent, determined, and to act faster in the fight against corruption. Prime Minister Chinh in October called for the anti-graft campaign to be more drastic and effective. Earlier, Tran Khanh Hien, head of research at VnDirect Securities Corp., said the government’s moves have boosted confidence among foreign investors. But she added they would want to see “how persistent and serious the authorities are.”
–With assistance from Nguyen Quynh Nga and Nguyen Dieu Tu Uyen.
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