How realtor wove $12 bn tapestry of fraud — the biggest in Vietnam

For several years, Truong My Lan (pictured) 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 billion tapestry of fraud and corruption, according to the police reports that form the basis of a court case against her.

Authorities allege there were “ghost” companies, payoffs to government officials and a bank she illegally controlled that disbursed loans to herself and her allies worth about 11% of the nation’s 2022 GDP. Her personal driver secretly shuttled millions of dollars in cash across the city’s chaotic streets, police say. Twenty-four government inspectors — whose jobs are responsible for ensuring the health and safety of the banking system — are alleged to have taken Lan’s money to cover up violations.

The woman behind Van Thinh Phat Group, one of Vietnam’s most moneyed real estate empires, now awaits a trial starting on March 5 — and a possible death sentence or imprisonment if found guilty. More arrests are expected in a probe that has contributed to a virtual freeze in the nation’s bond and real estate markets, as bureaucrats fearful of being swept up in police investigations slowwalk approving legal documents.

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.

“The government regulators are overwhelmed,” said Zachary Abuza, an expert on Southeast Asian politics at the National War College in Washington, D.C. “They can’t keep up with the growth of the economy. Look at the volumes of money pouring into the country. They just don’t have the manpower. And they’re so poorly paid.”

Vietnam is a one-party state where foreign media, including Bloomberg News, have limited access to documents such as police reports and reporting is heavily reliant on the local state-owned media. The foreign ministry, which handles enquiries to the government from foreign media, said in a statement that the party’s policy is to resolutely fight corruption “and to handle those who violate the law with strict punishments.”