Quote from Alex bobby on March 5, 2024, 5:07 AM

Vietnamese Property Tycoon Truong My Lan Faces $12.5 Billion Embezzlement Trial, Raising Concerns Over Economic Impact and Investor Confidence

HANOI, Vietnam (AP) — The trial of real estate magnate Truong My Lan commenced on Tuesday, with charges of alleged fraud amounting to a staggering $12.5 billion – a sum equivalent to nearly 3% of Vietnam's 2022 GDP, marking the country's largest financial fraud case to date.

Accusations against the 66-year-old chair of Van Thinh Phat real estate company include the utilization of "thousands of ghost companies," bribery payments to government officials, and violations of banking regulations, as outlined in an official government document. Lan stands accused of illicitly controlling the Saigon Joint Stock Commercial Bank from 2012 to 2022, allegedly embezzling the colossal $12.5 billion during this period. The trial implicates 85 other individuals, including a former State Bank of Vietnam official accused of accepting $5.2 million in bribes. Lan, arrested in October 2022, faces the possibility of a death sentence if found guilty.

Accompanied by authorities, Lan appeared in court around 7 a.m., with her husband, Eric Chu Nap-kee, summoned for questioning. Van Thinh Phat was a prominent player in Vietnam's real estate sector, involved in luxury residential buildings, offices, hotels, and shopping centers.

Lan's arrest is part of Vietnam's broader anti-corruption campaign that gained momentum in 2022. The Blazing Furnace initiative has resulted in numerous investigations into officials and business executives. In January 2023, the campaign reached the highest levels of government, leading to the resignation of former President Nguyen Xuan Phuc and two deputy prime ministers due to political responsibility for corruption scandals during the pandemic.

However, analysts note that the anti-corruption drive has cast a shadow over Vietnam's economic outlook, making foreign investors wary. This has occurred at a time when Vietnam positioned itself as an attractive destination for businesses looking to shift their supply chains away from China.

Lan's alleged embezzlement of $44 billion in loans between 2012 and 2022, coupled with the weighty 6-ton documentation related to the case, has sent shockwaves through the business community. Concerns are raised about the scale of the scam and the possibility of similar illicit activities within other banks and businesses.

The impact of the anti-corruption drive is evident in Vietnam's slowed bureaucracy, with public officials hesitant about being investigated and sluggish spending rates for public investment projects. Investors, especially in banking, finance, and real estate, are adopting a cautious "wait and see" approach amid the uncertainty.

The real estate sector, in particular, has borne the brunt, with an estimated 1,300 property firms withdrawing from the market in 2023. Developers resort to offering discounts and incentives, while the city center in Ho Chi Minh City witnesses vacant shophouses despite a one-third drop in rent.

Global demand constraints and reduced public investment have contributed to Vietnam's economic growth slowing to 5.05% last year, compared to 8.02% in 2022, according to government data. Communist Party General Secretary Nguyen Phu Trong emphasized that the anti-corruption fight is a long-term commitment, and authorities are investigating other cases linked to Lan's real estate companies, involving money laundering through overseas real estate transactions.