Industry News

How Doi Moi Beneficiary Stole $44bn from Vietnam Bank

Truong My Lan, 67, stole $44 billion from Vietnam’s largest bank.

Updated on

April 21, 2024

Vietnamese real estate tycoon Truong My Lan has made history as one of the few women in Vietnam to ever receive the death penalty for a white-collar crime.

On April 11, after a five-week trial, the billionaire founder of Van Thinh Phat Group, a property company, was convicted of embezzling $44 billion from Saigon Commercial Joint Stock Bank (SCB), one of Vietnam’s largest banks.

Ms. Lan, who was arrested in 2022, was facing charges of bribing government officials, violating banking rules and theft before a court in Ho Chi Minh City.

She was convicted of taking out $44 billion in loans from SCB over 11 years.

Prosecutors, who wanted the Vietnamese billionaire sentenced to death, claimed her actions resulted in a $27 billion loss for the bank, leading to tens of thousands of individuals losing their savings and investments.

Truong My Lan, who started as a market stall vendor, selling cosmetics with her mother, embarked on a land and property buying spree after the Communist Party ushered in a period of economic reforms, known as Doi Moi, in 1986.

By the 1990s, she owned a large portfolio of hotels and restaurants, making her one of the biggest beneficiaries of Doi Moi, translated literally as ‘restoration’.

Vietnam’s biggest fraud

According to the case files, what is now known as Vietnam’s biggest fraud began in 2011 when Ms. Lan merged three cash-strapped banks to form the SCB.

She then used the new bank to finance her real estate company, which owns luxury residences, office complexes, and hotels in Ho Chi Minh City.

The tycoon retrieved the money by setting up over 1,000 ‘ghost companies’ that took loans and held shares in the bank, masking her ownership stake of 91.5%.

Vietnamese law restricts individuals from owning more than 5% of shares in any bank. However, the billionaire bribed state auditors to overlook her actions.

Ms. Lan was accused of exercising “almost absolute control over the bank,” directing credit and personnel matters, appointing family members to key roles, and providing lucrative salaries and bonuses.

About $1.2 billion was lost by bondholders of Van Thinh Phat, with as many as 42,000 investors believed to have bought Ms. Lan’s fraudulent products.

The tycoon will face additional charges in a subsequent trial addressing the fraud.

Ms. Lan, eligible to appeal the verdict within 15 days under Vietnam’s criminal code, has consistently denied the charges during the court proceedings.

However, earlier this month, in a statement addressed to the court, she expressed regret for her actions, saying, “I was foolish to venture into the harsh world of business, into the banking sector, which I was not proficient in.”