Vietnamese tycoon’s death penalty upheld in unprecedented fraud case

Truong My Lan, a 68-year-old property tycoon and founder of Van Thinh Phat Group, has had her death sentence upheld by a Vietnamese appellate court in Ho Chi Minh City on 3 December 2024.

Lan was convicted in April 2024 for orchestrating one of the largest fraud schemes in history, which resulted in US$27 billion in damages, equivalent to 6 per cent of Vietnam’s 2023 gross domestic product.

The fraud spanned over a decade, during which Lan used her effective control of Saigon Commercial Bank (SCB) to embezzle US$12 billion.

Her network of shell companies, collusion with officials, and falsified loan applications formed the backbone of a sophisticated scheme that devastated thousands of depositors and destabilised the country’s financial system.

During her appeal, Lan described the death penalty as “too severe and harsh,” requesting the court adopt a more “lenient and humane approach.”

Despite her claims of remorse, the appellate court determined that her actions had inflicted “unprecedented damage” on the nation and eroded public trust in both the Communist Party and state institutions.

Lan’s husband, Hong Kong billionaire Eric Chu Nap-kee, was implicated in helping her use the embezzled funds to establish a sprawling property empire across Vietnam, Hong Kong, and Singapore.

The indictment noted that companies associated with the couple and Van Thinh Phat have been liquidating assets since Lan’s arrest on 7 October 2022, but prosecutors argued she has not sufficiently cooperated or returned enough funds to justify leniency.

The fraudulent scheme

The trial revealed that Lan controlled 85 to 91.5 per cent of SCB’s shares despite officially holding only 5 per cent. Between 2012 and 2022, she directed SCB executives to approve fraudulent loans backed by falsified collateral valuations.

According to the indictment by the Supreme People’s Procuracy, 916 fabricated loan applications enabled Lan and her associates to access VND 304 trillion (approximately US$12.2 billion), causing VND 129 trillion in losses.

Prosecutors detailed how Lan collaborated with officials, including appraisers and government regulators, to conceal the fraud. Bribes totalling millions of dollars were allegedly paid to cover irregularities and ensure the scheme remained undetected.

These payments included direct bribes to inspectors from the State Bank of Vietnam, whom Lan relied on to bypass special audits.

During the trial, the court ordered Lan to repay nearly the entire amount embezzled.

Under Vietnamese law, her death sentence could be commuted to life imprisonment if she repays three-quarters of the US$12 billion embezzled (approximately US$9 billion). However, the state has frozen her assets, complicating her efforts to liquidate properties to meet this target.

Impact on Vietnam

Lan’s crimes triggered widespread financial chaos, leading the State Bank of Vietnam to intervene with an undisclosed bailout to stabilise SCB.

The collapse also shocked the public, as tens of thousands of depositors lost their savings. This sparked rare protests in Vietnam, where public demonstrations are typically suppressed.

The People’s Court of Ho Chi Minh City highlighted that Lan’s crimes had “deeply undermined trust in the leadership of the Party and state.”

Lan’s conviction is among the most high-profile outcomes of Vietnam’s “Burning Furnace” anti-corruption campaign, led by Communist Party Secretary-General Nguyen Phu Trong. The campaign has sought to eradicate corruption among both business leaders and government officials, positioning Lan’s case as a cornerstone of its efforts.

A race against time

Since her arrest, Lan’s family and businesses have been attempting to liquidate assets. However, many of these are luxury properties, including real estate in Vietnam’s prime locations and commercial properties overseas. Selling such assets quickly has proven difficult, and frozen accounts further hinder her ability to repay the required US$9 billion.

Her lawyers have argued that while the total value of her holdings exceeds this amount, the court should consider easing restrictions to facilitate asset sales.

“The total value of her holdings actually exceeds the required compensation amount,” said her lawyer, Nguyen Huy Thiep. “However, these require time and effort to sell, as many of the assets are real estate and take time to liquidate.”

Prosecutors have been sceptical of her efforts, insisting that she has yet to demonstrate meaningful cooperation.

In court, Lan insisted, “The quickest way to repay the stolen funds is to liquidate SCB, sell our assets, and repay the people and the State Bank of Vietnam.”

Despite her statements, observers note that Lan faces significant challenges in raising the funds. “This is now a race against the executioner,” commented one legal expert familiar with the case.

Lan remains in custody and retains the option to petition Vietnam’s president for amnesty.

However, Vietnam’s record on capital punishment raises concerns about her prospects. Human rights groups estimate over 1,000 individuals are on death row, and executions, though rarely publicised, are carried out regularly.

Her co-defendants, including high-ranking SCB executives and government officials, received lengthy sentences. Among the 27 convicted, four were sentenced to life imprisonment, while others received terms ranging from 20 years to three years. Bribery charges were also filed against several officials accused of facilitating Lan’s scheme.