For several years, Truong My Lan held meetings on the 39th floor of the sleek Times Square tower in the heart of Vietnam’s commercial hub, Ho Chi Minh City. There, in a room that acted as her command center, she allegedly wove a $12.
5 billion tapestry of fraud and corruption, according to the police reports that form the basis of a court case against her.
The country’s largest-ever fraud case is among a slew of high-profile proceedings following from the Communist Party of Vietnam’s crackdown on corruption. It highlights the developing economy’s challenges as it courts foreign investment to become a global electronics hub for companies like Apple Inc. and Samsung Electronics Co. The scandal also raises questions of whether the government has the capacity to safeguard the banking system, bond market and overall economy amid an explosion of wealth.
But the country is struggling to keep up with the rapid pace of change. Like the Chinese government, which has pursued a sweeping anti-corruption drive as the economy has grown, Vietnam’s leaders see graft as a risk to their hold on power. Communist Party Secretary Nguyen Phu Trong’s crusade to root out avarice is now years old, with no obvious end in sight.
She began selling cosmetics at the age of 16 and got into the restaurant and hotel sector after marrying Chu, according to the South China Morning Post. In 1991, Lan founded VTP Group, which says on its website that it was Ho Chi Minh City’s first private company. Police allege that Lan illegally controlled more than 90 percent of SCB by paying 27 individuals and entities to acquire stakes in the institution. SCB disbursed loans of more than $43 billion to Lan and her allies between 2012 and October 2022, according to police allegations reported by Tuoi Tre News.
“Investors have lost trust in the bond market,” said Hanoi-based economist Nguyen Tri Hieu, who is a consultant for three local credit ratings agencies. This year, about 279.2 trillion dong of corporate bond payments are due, including 115.7 trillion dong of property bonds, according to the Vietnam Bond Market Association. Many companies may struggle to make payments, he said.