DEATH PENALTY: Vietnamese Trader – and Foreign Business – In Jeopardy

By IPS Correspondents Reprint | | Print |

Tran Dinh Thanh Lam

HO CHI MINH CITY, Aug 22 2006 (IPS) - A Vietnamese trader could face the death penalty if she is found guilty of losing money on a foreign currency transaction while working for a state-owned bank.

Nguyen Thi Quynh Van is a former deputy head of trade finance at a branch of one of the largest state-owned banks, Industrial and Commercial Bank of Vietnam (Incombank). Police charged her with “losing state resources through economic mismanagement.” That crime carries the death penalty in this Southeast Asian nation.

Authorities say she lost 5.4 million US dollars in speculative currency trades made with three foreign banks doing business in Vietnam, although only one bank, ABN Amro, has been publicly named. Two Vietnamese employees of ABN Amro Vietnam affiliate were also jailed. Another two bankers from the Dutch bank were placed under house arrest.

Vietnamese-American Del Pham, general director of the ABN Amro Hanoi branch, has been asked to clarify issues related to activities conducted by the bank within Vietnam. He has been banned from leaving the country.

In response to the police arrests, Incombank Aug. 3 filed a lawsuit against ABN Amro, seeking the return of the money, plus interest and court fees.

“The persons involved at our branch weren’t registered (authorised), and persons at the other bank (ABN Amro) knew about this and still undertook transactions with them, so it’s clear that they were wrong as well,” Incombank spokesman Tran Duy Bich said.

The state and Incombank say that Van was never authorised to make foreign exchange transaction. Moreover, they charge that her conduct amounted to mismanaging funds. ABN Amro denies any wrongdoing, saying it believed it was simply conducting a routine business transaction.

“ABN Amro believes the trades were valid,” the bank said in a statement.

One employee of ABN Amro who spoke with IPS on condition of anonymity strongly denied the case involved illicit foreign exchange (forex) deals.

“How could we know that a deputy director of finance at Incombank wasn’t allowed to conduct forex transactions?” The employee asked.

Van’s arrest is just one example of a series of crackdowns in corruption, graft and embezzlement – all crimes which can lead to a death sentence. Since 2003, Vietnamese courts have sentenced 11 high-ranking officials and businesspeople to death for economic crimes.

An additional five people have actually faced the firing squad. The latest execution was carried out in March on Phung Long That, head of the custom department’s Anti-Smuggling Office, who was found guilty of accepting bribes and smuggling, according to Amnesty International.

Foreign investors, however, are wary of this most recent case. They little trust in Vietnam’s legal system, which they say is not independent of the government or the Communist Party. In addition, they say the Incombank suit against ABN Amro may show that the laws could be applied arbitrarily.

Imposing the death penalty for economic crimes could hinder foreign business from coming to the country. Many businessmen and lawyers have requested the state to abolish the death sentence imposed on white collar crime.

Together with the chairman of the American Chamber of Commerce Tom O’Dore, many foreign banks operating in Vietnam have expressed concerns about the criminalisation of normal business transactions. They note that the police, which they believe is prone to political pressure, has filed the charges against Van and ABN Amro, not country’s central bank.

The central bank as the official regulator of the financial sector has neither filed charges against any company nor publicly commented on the case.

“The (criminalisation of business transactions) could freeze business in Vietnam, and the (lack of central bank involvement) could negatively impact Vietnam’s financial markets in general – and foreign exchange markets in particular,” O’Dore said in a statement.

One businessman agreed this case could have a chilling effect on foreign investments. He noted that frequently banks and businesses lose money in foreign exchange deals and that the state cannot shield companies it owns from the ups and downs of the free market.

“People keep on thinking that police have wrongly arrested representatives of a foreign bank to help a local bank recoup its forex transaction losses,” Edward E.G. Samuel, a veteran businessman in Ho Chi Minh City told IPS.

Lawyer Pham Hung, former chairman of Vietnam’s Lawyer Association, agreed that the death penalty should not be imposed on economic crimes. “The Criminal Code should be revised on the basis of the current situation in Viet Nam.”

Government officials have been quick to downplay the Van case and its possible consequences on foreign investment.

Vietnam has ratified the United Nations Convention against Corruption, and is committed to carrying it out, said Nguyen Van Thanh, head of research at Vietnam’s Government Inspectorate.

“Ratifying the UN convention goes along with a host of other measures that will make Vietnam a more transparent place to do business,” he told IPS. “From our point of view, it is very important for the investors to see the developing of our transparency, and if we do that we can get more investors internationally into Vietnam.”

Foreign Affairs spokesman Le Dung reaffirmed that resolution when he told the media, “Vietnam’s relevant agencies are dealing with the case transparently and clearly, in conformity with Vietnamese law and our country’s commitments to international agreements.”

So far, the foreign investors don’t seem convinced.

“Van may be only a scapegoat for Incombank. But the outcome of the legal dispute between Incombank and ABN Amro could become an interesting test given to Vietnam in a time when the country is making its best to polish its image of a trustworthy candidate for the World Trade Organisation,” Samuel said.