A court in Vietnam sentenced property developer Truong My Lan, 67, to death last week after a five-week trial found her guilty of embezzling more than $12.5bn from Vietnam’s largest commercial bank.
Her actions led to a loss of $27bn from the Saigon Commercial Joint Stock Bank (SCB), which wiped out the savings and investments of tens of thousands of people, state news agency Vietnam.net reports.
Prosecutors asked for the death penalty owing to the severity of the crime.
The verdict said: “The defendant’s actions not only violated the asset management rights of individuals and organisations but also pushed SCB into a state of special control, eroding the public’s trust in the leadership of the Party and the State.”
Lan’s husband Eric Chu was also on trial. He was sentenced to nine years in prison for violating banking regulations. Scores of other defendants are still awaiting sentence.
Details of the case
The fraud began in 2011 after Lan merged three banks to form SCB, and then used it to finance her Van Thinh Phat property company, which owns hotels, luxury residences and office buildings in Ho Chi Minh City.
She accessed the money by setting up more than 1,000 “ghost companies” that borrowed money and held shares in SCB, disguising the fact that she held 90% of its equity.
She also bribed state auditors to turn a blind eye to her activities.
According to the court, Lan had complete control over SCB, “directing not only credit activities but also personnel matters, appointing family members to key positions, and offering generous salaries and bonuses”.
In March 2024, her niece, Truong Hue Van, 34, admitted that she established 52 shell companies and four regular companies to obtain 155 loans from SCB.
Prosecutors have recommended a reduced sentence for Van since she confessed her crimes and asked to repay investors’ money.
About $1.2bn was lost by holders of bonds issued by Van Thinh Phat, Lan’s real estate firm.
Nguyen Thi Hong, the governor of the State Bank of Vietnam, said all savings accounts are secured by the central bank and that customers will be reimbursed.
But she refused to offer guarantees to those who bought bonds issued by SCB.
It is thought that as many as 42,000 investors may have bought Lan’s fraudulent products. Another trial will take place to remedy this fraud, in which Lan will face additional charges.
One investor, Nguyen Thi Diep, 68, told the South China Morning Post: “I’m in so much pain that I want to die, but I know I can’t die. I need to get the money back to repay my family.”
Nguyen used her life savings to buy $80,000 of bonds from SCP and shell companies linked to it. The investment was intended to fund her children’s education and pay for the healthcare of older family members.
SCB was bailed out by the state in October 2022.
The “Blazing Furnace” purge
Lan had pleaded not guilty to all charges against her. She said she was asked by the central bank to oversee the merger that created SCB and that she had persuaded her friends to buy shares to save it from bankruptcy.
However, in a statement to the court earlier this month, she also expressed remorse for her actions. She said: “I was foolish to venture into the harsh world of business, into the banking sector which I was not proficient in.”
Lan has the right to appeal against the sentence, which comes as Vietnam’s Communist Party is carrying out a long-running purge of corrupt party officials and private sector business people, which Nguyen Phu Trong, the secretary-general of the party, has titled “the blazing furnace”.
The campaign has led to hundreds of arrests, as well as the resignation of two presidents and two deputy prime ministers.
Three of the “big four” accounting firms are also being accused by Vietnamese authorities of committing violations in the SCB case.
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