Jury says SCB induced depositors to purchase fraudulent Vạn Thịnh Phát bond

Trương Mỹ Lan at HCM City People’s Court on Wednesday. She received a life sentence for fraud and appropriation, adding to her prior death sentence for embezzlement. — VNA/VNS Photo

HCM CITY — The Saigon Commercial Bank (SCB), in which Trương Mỹ Lan, chairwoman of Vạn Thịnh Phát Group, holds a substantial interest, has been implicated by a local court in a scheme defrauding around 36,000 victims, mostly its depositors, into purchasing counterfeit bonds.

After a one-month trial, the HCM City People’s Court on Thursday sentenced 68-year-old Lan to life imprisonment for fraud, money laundering, and illegal currency transfer across borders, in addition to her prior death sentence for embezzlement, in part of what is considered Việt Nam’s worst-ever financial fraud.

The court found that Lan was responsible for defrauding nearly VNĐ31 trillion (US$1.23 billion) from nearly 36,000 bond investors, laundering VNĐ445.7 trillion, and illegally transferring $4.5 billion across borders.

Between 2018 and 2020, Lan, in collaboration with executives from SCB and the Vạn Thịnh Phát Group, utilised four companies to issue 25 fraudulent bond tranches, according to judicial findings.

Lan’s schemes were facilitated by corrupt officials, including a former central bank inspector who has been sentenced to life imprisonment for accepting $5.2 million in bribes to ignore the misconduct at SCB.

The jury noted that the bond issuance involved numerous individuals connected to both the Vạn Thịnh Phát Group and SCB.

“Lan and her associates employed deceptive tactics to issue fraudulent bonds, while SCB actively sought to induce its depositors to acquire them,” the jury stated. “The crime was completed upon the transfer of funds to SCB.”

The funds from selling the fraudulent bonds were utilised to settle debts, including addressing financial challenges faced by SCB, and to invest in various real estate projects, with massive amounts being transferred abroad unlawfully.

Trương Huệ Vân, Lan’s niece, was sentenced to five years for misappropriating VNĐ13 trillion from over 20,000 victims. Lan’s husband, Eric Chu Nap-kee, received two years for laundering over VNĐ30 billion. Lan’s sister-in-law, Ngô Thanh Nhã, got five years for property appropriation.

Former SCB deputy director Trương Khánh Hoàng was sentenced to 23 years for aiding Lan. Former general director Võ Tấn Hoàng Văn received 17 years for property appropriation and illegal currency transfer.

Former chairman Bùi Anh Dũng was sentenced to 10 years for similar charges.

All have accepted responsibility for their actions.

Lan has requested the court consider various funds for the purpose of compensation and has proposed to offer significant assets as restitution for the victims.

Previously sentenced to death for embezzlement from SCB, Lan’s appeal in that matter remains pending.

Between 2012 and 2022, Lan oversaw over 2,500 loans within her network, with more than 1,300 still outstanding as of October 2022, totaling VNĐ673.8 trillion.

Following her arrest at the end of 2022, certain bond issuers defaulted on their debt obligations, and the remaining bonds have since been frozen.

Consequently, bondholders have not received any principal or interest payments since that time.

Private lender SCB was immediately placed under the supervision of the Central bank to prevent a bank run.

The Central bank has guaranteed only the savings accounts at SCB but has declined to assume any responsibility for bondholders.

The headquarters of Saigon Commercial Bank (SCB) in HCM City, which has been identified as playing a key role in defrauding over 36,000 victims into purchasing fraudulent bonds. — VNS Photo Bồ Xuân Hiệp

Anti-corruption drive

The arrest of Lan at the end of 2022 is a major milestone in a nationwide anti-corruption campaign, referred to as “Burning Furnace,” initiated in 2016.

The massive campaign, which has intensified in recent years, has led to the scrutiny of high-ranking officials and has impacted numerous individuals across various levels of government.

The crackdown on corruption has resulted in the forced resignations of numerous senior officials, and incarceration for several prominent figures in both the government and business sectors.

Lan is the first businesswoman to be sentenced to death, marking her case as the most high-profile instance to date.

Originally a cosmetics vendor, Trương Mỹ Lan subsequently ascended to leadership of Vạn Thịnh Phát Group, a prominent real estate developer in Việt Nam.

The scandal has revealed significant issues in Việt Nam’s banking sector, particularly concerning “cross-ownership”, which allows undue influence over banks. — VNS