Van Thinh Phat chairwoman to face trial in $12.53 bln embezzlement case

Truong My Lan, chairwoman of property developer Van Thinh Phat Group, will face trial for embezzling over VND304 trillion ($12.53 billion) from Ho Chi Minh City-based Saigon Commercial Bank (SCB).

The Supreme People’s Procuracy issued an indictment Friday against Lan and 85 other defendants in the case more than a month after the investigating agency under the Ministry of Public Security announced its conclusions.

The indictment accuses Lan of bribery, violating banking regulations and embezzling.

Among the defendants are 41 leaders and officials of SCB; 15 former State Bank of Vietnam (SBV) officials; three former officials of the Government Inspectorate; and one former official from the State Audit Office.

They are also accused of embezzling; violating banking regulations; receiving bribes; abusing positions and power while performing official duties; and showing a lack of responsibility causing serious consequences.

Do Thi Nhan, former head of the State Bank of Vietnam's banking inspection and supervision department II, is accused of accepting bribes totaling $5.2 million, the largest bribery amount recorded so far in Vietnam.

The case against Van Thinh Phat chairwoman and her accomplices will be tried by the Ho Chi Minh People’s Court.

Sophisticated tricks

According to the indictment, during 2012-2022, Lan did not hold any position at SCB but owned a controlling stake of 85% to 91.5%. The procuracy said Lan "manipulated the entire operations of SCB for various purposes."

She and her accomplices arranged for people they trusted to be given key leadership positions on SCB’s board of directors and executive board, and set up some units specializing in providing loans requested by the Van Thinh Phat chairwoman.

Lan also instructed her subordinates to hire 440 individuals and use 435 legal entities which were shell companies that did not engage in any business activities and were only used to register loans with SCB and make fake documents to withdraw money from the bank.

They colluded with price appraisal companies to falsely increase the value of collateral assets and prepared false loan documents to take money from SCB.

The prosecutors determined that the Van Thinh Phat ecosystem operated under the holding company model with Van Thinh Phat Group playing a central role, holding shares and controlling all activities of companies in the ecosystem without direct involvement in business activities.

The group is mainly involved in real estate, restaurants and hotels.

1,000-plus business ecosystem

The Van Thinh Phat ecosystem consists of more than 1,000 businesses including member companies at home and abroad, with hundreds of individuals hired as their legal representatives. These companies could be divided into four groups.

The first group includes financial entities in Vietnam like Saigon Commercial Bank (SCB), Tan Viet Securities JSC, and Viet Vinh Phu Financial Investment Corporation, with the SCB playing a particularly important role as a financial tool to fund other companies in the ecosystem.

The second group features companies with business activities in Vietnam, mostly operating in real estate, restaurants and hotels. They have large charter capitals and hold dominating stakes in member companies, like Saigon Peninsula Group Corporation with a charter capital of VND18 trillion ($744.26 million) and An Dong Investment Group JSC with VND9 trillion ($327.13 million).

The third group comprises "ghost” companies in Vietnam, established as legal entities to help Van Thinh Group contribute capital to projects, borrow money from banks, carry out debt rollovers or sign cooperation contracts.

The fourth group is a network of many shell companies in "tax haven" territories and countries to serve investment and business activities abroad or for investing in Vietnam as "foreign investors." These are responsible for managing the capital and assets of Lan’s family abroad.