subscribe Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Subscribe now
Vietnam's Communist Party General Secretary Nguyen Phu Trong, pictured in 2018. Picture: REUTERS
Vietnam's Communist Party General Secretary Nguyen Phu Trong, pictured in 2018. Picture: REUTERS

Hanoi — Vietnam’s top leader vowed to extend “for the long-term” an anticorruption campaign that has had a chilling effect on the economy, after police revealed financial scandals in the real estate sector worth more than 3% of GDP.

The campaign against graft has been under way since 2016, but gained momentum last year after authorities in the Communist-ruled country cracked down on high-profile frauds and corruption cases involving corporate executives and state officials.

“We need to conduct the anticorruption fight faster in a more efficient manner,” Communist Party general secretary Nguyen Phu Trong said on Wednesday, state media reported. “We won’t stop here, but will continue for the long term,” he said.

Trong’s remarks came after the police announced the outcome of months-long investigations into two financial scandals, revealing for the first time the scale of the fraud, worth a combined $12.8bn, or 3.2% of the economy.

In the biggest of the two scandals, Truong My Lan, chair of real estate developer Van Thinh Phat Holdings, and her accomplices embezzled 304-trillion dong ($12.54bn) from Saigon Joint Stock Commercial Bank, according to the investigation, the outcome of which was published on Sunday.

The case had been widely publicised when My Lan was arrested in October last year and led to a crisis in the real estate sector and the market for corporate bonds, which she has been accused of issuing illegally in large amounts.

The intensification of the antigraft campaign, known as “blazing furnace” and reminiscent of campaigns in neighbouring China, has been seen as compounding the negative economic effect of that scandal, paralysing many routine transactions as officials fear being entangled in investigations.

The huge scale of the fraud had not been known until this week and has raised concern among financial experts about the impact on the banking sector. JPMorgan Research said the size of the scandal could lead to stricter enforcement of financial rules, which would cause higher costs for lenders, while potentially slowing growth.

In September, the Asian Development Bank warned of potential spillover into banking from the crisis in the real estate sector as the ratio of non-performing loans increased. On Wednesday, a ratings agency co-owned by Moody’s said Vietnam’s listed property developers faced increased pressure to pay their large debts as profits plunged and their cash reserves dropped to the lowest levels in more than five years.

In an unrelated scandal, police late on Wednesday accused the chair of property developer Tan Hoang Minh Group of illegally raising 8.6-trillion dong from issuing bonds to 6,600 investors.

Reuters

subscribe Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Subscribe now

Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.