In capitalist Vietnam, death to
bankers By Tran Dinh Thanh Lam
HO CHI MINH CITY - A Vietnamese trader
could face the death penalty if she is found
guilty of losing money on a foreign-currency
transaction involving foreign banks she oversaw
while working for a state-owned bank.
Nguyen Thi Quynh Van is former deputy head
of trade finance at the Industrial and Commercial
Bank of Vietnam, known widely as Incombank, one of
the country's largest state-owned financial
institutions. Police
recently charged her with "losing state resources
through economic mismanagement", a crime that
carries the death penalty in Vietnam.
Authorities maintain that she lost US$5.4
million in speculative currency trades made with
three foreign banks that do business in Vietnam,
although only one bank, ABN Amro, has been accused
publicly. Two Vietnamese employees of ABN Amro's
Vietnam affiliate were also jailed, and another
two bankers from the Dutch bank were placed under
house arrest.
Vietnamese-American Del
Pham, general director of ABN Amro's Hanoi branch,
has been asked to clarify issues related to the
bank's recent activities and transactions within
Vietnam. He has been banned from leaving the
country while under investigation. In response to
the arrests, Incombank on August 3 filed a lawsuit
against ABN Amro seeking the return of the money,
plus interest and court fees.
"The persons
involved at our branch weren't registered, and
persons at the other bank [ABN Amro] knew about
this and still undertook transactions with them,
so it's clear that they were wrong as well," said
Incombank spokesman Tran Duy Bich.
The
state and Incombank say that Van was not
authorized to undertake foreign-exchange
transactions and that her conduct represented
mismanagement of funds. ABN Amro, for its part,
denies any wrongdoing, saying it was simply
conducting a routine business transaction. "ABN
Amro believes the trades were valid," the bank
said in a statement.
One employee of ABN
Amro who spoke on condition of anonymity strongly
denied that the case involved illicit
foreign-exchange deals. "How could we know that a
deputy director of finance at Incombank wasn't
allowed to conduct forex transactions?" the
employee asked.
Van's arrest is the latest
case in a series of government-led crackdowns on
suspected corruption, graft and embezzlement - all
crimes that can lead to the death sentence in
Vietnam. Since 2003, Vietnamese courts have
sentenced 11 high-ranking officials and business
people to death for economic crimes.
The
latest execution was carried out in March on Phung
Long That, head of the Customs Department's
anti-smuggling office, who was found guilty of
accepting bribes and smuggling, according to
UK-based rights group Amnesty International.
The recent case represents the first big
case to involve foreign investors. Many foreign
investors here say they lack faith in Vietnam's
legal system, which they contend, based on recent
court decisions, lacks independence from the
government and ruling Communist Party.
The
Incombank suit against ABN Amro will become a
closely watched legal litmus test for many foreign
investors, they say. The use of the death penalty
for economic crimes has given many foreign
businesses pause, and many have requested the
state to abolish the death sentence for
white-collar crimes.
Moreover, many
foreign banks with operations in Vietnam and the
American Chamber of Commerce have expressed their
concerns about the criminalization of what they
view as normal business transactions. They note
that the police, possibly prone to political
pressure, decided to file charges against Van and
ABN Amro but notably not the central bank.
The central bank, the official regulator
of Vietnam's financial sector, has neither filed
charges against any company nor publicly commented
on the high-profile and controversial case.
"The [criminalization of business
transactions] could freeze business in Vietnam,
and the [lack of central-bank involvement] could
negatively impact Vietnam's financial markets in
general and foreign-exchange markets in
particular," American Chamber of Commerce chairman
Tom O'Dore said in a statement related to the
case.
"People keep on thinking that police
have wrongly arrested representatives of a foreign
bank to help a local bank recoup its forex
transaction losses," said Edward E G Samuel, a
veteran businessman based in Ho Chi Minh City.
"The outcome of the legal dispute between
Incombank and ABN Amro could become an interesting
test at a time when Vietnam is doing its best to
polish its image as a trustworthy candidate for
admission to the World Trade Organization."
Another businessman, who requested
anonymity, agreed that the Incombank-ABN Amro case
could have a chilling effect on future foreign
investments. He noted that Vietnamese banks and
businesses frequently lose money in
foreign-exchange deals and ventured that the
government should not try to shield state
companies from the ups and downs of the free
market.
Government officials, for their
part, have been quick to play down the Van case,
particularly in connection with its possible
adverse consequences on foreign investment.
"Vietnam has ratified the United Nations
Convention against Corruption and is committed to
carrying it out," said Nguyen Van Thanh, head of
research at the Vietnam's Government Inspectorate.
"Ratifying the UN convention goes along
with a host of other measures that will make
Vietnam a more transparent place to do business,"
he said, adding: "From our point of view, it is
very important for the investors to see the
developing of our transparency, and if we do that
we can get more investors internationally into
Vietnam."
Foreign Affairs spokesman Le
Dung reaffirmed that stance when he told the
media, "Vietnam's relevant agencies are dealing
with the case transparently and clearly, in
conformity with Vietnamese law and our country's
commitments to international agreements."
So far, however, foreign investors in
Vietnam don't seem fully convinced.
