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Banking & Finance

Former VNCB officials behind bars

Released at: 14:06, 10/09/2016

Former VNCB officials behind bars

Photos: Courtesy/Infonet

Bank Chairman receives 30-year sentence as 36 officials in total found guilty in fraud case.

by Duy Anh

Former Chairman of the Vietnam Construction Bank (VNCB) Pham Cong Danh has been sentenced to 30 years in jail while his accomplices received sentences between three years probation and 22 years in jail after a two-month trial. The verdicts on 36 former bank employees were announced on September 9.

They were found to be responsible for losses of over VND9 trillion ($396 million), the largest loss in Vietnam’s banking sector to date.

Mr. Danh was found guilty of deliberately breaking laws on economic management and violating bank lending activities. He received 18 years and 20 years for each conviction and was given the maximum sentence of 30 years.

Three others faced similar charges. Former General Director Phan Thanh Mai received 22 years in jail, former Board Member Mai Huu Khuong received 20 years, and former Director of the Lam Giang Branch Hoang Dinh Quyet received 19 years.

Mr. Danh, former Chairman of VNCB’s Board of Directors and Board of Members as well as General Director of the Ho Chi Minh City-based Thien Thanh Group, allegedly directed his staff to withdraw VND12 trillion ($528 million) from the bank for his private purposes.

Apart from the Thien Thanh Group, Mr. Danh established 29 other companies and asked relatives and acquaintances to act as company directors and to also purchase VNCB shares in order to gain control.

In 2012 the State Bank of Vietnam restructured Trust Bank and re-branded it as VNCB. Twenty investors were allowed to participate, mostly companies founded by Mr. Danh or his relatives, according to investigators. Mr. Danh ended up controlling more than 84 per cent of the bank’s shares.

From June 2013 to March 2014 he allegedly colluded with other executives in faking documents in the core banking system to access VND63.3 trillion ($2.88 million), supposedly for funding system upgrades and new office projects.

From December 2012 to March 2014 he also founded a dozen subsidiaries under the Thien Thanh Group name to take out loans from the bank, using assets that had already been put down as collateral for loans from other banks. The value of the assets was stated at more than VND2 trillion ($88 million), which was inflated and could not be recovered.

Mr. Danh was caught in July 2014 for “deliberately violating State regulations on economic management, causing severe consequences”, “violating lending regulations of credit institutions”, and “a lack of responsibility, causing serious consequences”, according to then SBV Governor Nguyen Van Binh.

Trust Bank was in operation for 23 years, with charter capital of VND3 trillion ($142.85 million). In late 2014 the SBV appointed new officials to VNCB after its senior executives were arrested.

In March 2015 the SBV acquired all equity in VNCB at a price of VND0 per share. “The acquisition is compulsory, to restore VNCB’s payment abilities in line with general efforts to create a healthier banking system,” Governor Binh said at the time.

The country’s banking sector has been rocked by a series of scandals in recent years, with the high-profile arrests of wealthy businesspeople and executives over allegations of corruption, embezzlement or incompetence.

Earlier this year, three former senior bankers and six securities officials were arrested over a fraud involving millions of dollars at the partly State-run Mekong Housing Bank (MHB).

In July last year police arrested the former Chairman of State oil giant PetroVietnam over errors that allegedly led to the loss of a $38 million investment in Ocean Bank.

Ocean Bank’s former Chairman Ha Van Tham, once one of Vietnam’s richest businessmen, is now in detention awaiting trial for violations of lending regulations, including approving millions of dollars of loans without proper collateral.

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