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What’s Behind Vietnam’s Latest Anti-Corruption Fight

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 last year out of 180 ranked. 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 last year, 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. In meetings with voters in Hanoi in October, he affirmed that the fight was ongoing, with more cases coming, state-owned broadcaster VTV reported.

2. Who’s in the crosshairs?

In the first six months of 2022, 295 party members were disciplined due to corruption and deliberate wrongdoing, according to a posting on the Party’s website. In the same period criminal proceedings were initiated in 297 cases against 682 individuals for alleged bribery, and more than 9 trillion dong ($371 million) was recovered. Police also have detained a number of executives as part of investigations into alleged fraud tied to corporate bond issuance and trading and stock price manipulation. For example:

• 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 corporate bond issuance and trading. The detention led to a brief run on the privately held Saigon Commercial Bank because of its perceived connections with Van Thinh Phat 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 bribery and abuse of power investigations involving Viet A Technology JSC, the maker of Covid-19 test kits. Officials have initiated criminal proceedings against 89 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 ongoing 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 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.

• In April police detained deputy Foreign Affairs Minister To Anh Dung over alleged bribery while he organized repatriation flights for Vietnamese abroad during the pandemic. A deputy prime minister’s assistant and a director of the Government Office’s department of international relations also have been detained.

• Prime Minister Pham Minh Chinh in April 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?

Vietnam has warned that corruption could put the party’s legitimacy and hold on power at risk as the public grows more intolerant of graft -- 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. Global manufacturers have been exploring ways to diversify their supply chains away from China, which has been caught up in pandemic lockdowns and a trade war with the US, and Vietnam has benefited. Its 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. But in Vietnam’s closely controlled, one-party state, it’s difficult to say if there’s any other motivation beyond building legitimacy. Freedom House, a US-based advocacy group, ranks Vietnam as “not free,” with a score last year of only 19 points out of 100. Human rights groups repeatedly accuse the government of tamping down on dissent. Transparency International, a Berlin-based anti-corruption group, gave it a score of 39 out of 100 last year, from 31 in 2012 -- the year then-Prime Minister 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.

In 2021 the anti-corruption committee disciplined 618 party members for “corruption or intentional wrongdoings.” It also reported prosecuting 390 graft cases and recovering at least $400 million in assets.

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, and the Party chief in an August speech urged officials to be persistent and determined, given the “serious” corruption in some sectors and localities, according to the goverment’s website. Trong also ordered trial proceedings in some major cases to move faster. Chinh, the prime minister, in October called for the anti-graft campaign to be more drastic and effective, according to another statement on the government’s website. 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 Dieu Tu Uyen, Nguyen Xuan Quynh and John Boudreau.

(Updates with latest probes and arrests)

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