How Van Thinh Phat chairwoman withdrew $44B from lender SCB

According to a police investigation, Van Thinh Phat operated as a joint-stock corporation with more than 1,000 domestic and foreign subsidiaries and member companies.

Van Thinh Phat Group played the central role, controlling all activities of companies under its umbrella and not participating directly in business activities.

Its subsidiaries were divided into four main groups, with one of them being financial institutions such as SCB, Tan Viet Securities Company, and Viet Vinh Phuc Company.

The second is a group of businesses operating in the fields of real estate, restaurants, and hotels such as Saigon Peninsula Group and An Dong Investment Group.

The third group is ghost companies registered in Vietnam to get legal entities to contribute capital to invest in projects and borrow money from banks.

The final group comprises companies operating in other countries. This group was responsible for managing foreign investment activities in Vietnam and managing Lan’s family’s assets abroad.

Police said that since the end of 2011, Lan had started using other people’s names to own the majority of shares in joint-stock commercial banks Saigon Commercial JSC, Vietnam Tin Nghia, and De Nhat. Investigators said that members of her family held senior positions at the bank, which "basically served her".

On January 1, 2012, she merged the three banks into SCB. Since then, SCB has been used by Lan as a financial company to fund Van Thinh Phat's operations. As of 2022, SCB had a charter capital of more than VND15 trillion.

Although she does not directly hold executive power, Lan owns as many as 91.5% of the shares in the bank.

In order to control the bank’s operations, Lan only recruited people with many years of experience in the field of finance and banking that she trusted to hold key positions and paid them monthly salaries of VND200-500 million.

According to the Law on Credit Institutions, SCB is allowed to receive deposits from individuals and businesses to provide credits to borrowers.

However, Lan had used the deposits for her personal expenses by directing the bank's leaders to coordinate with key officials at Van Thinh Phat to withdraw the bank's money in the form of disbursement for false loan applications.

What she did violated the laws as current regulations prohibit organizations and individuals from illegally intervening in banking operations.

Furthermore, an individual shareholder may not own more than 5% of the charter capital of a credit institution, police said.

From 2012 to 2022, SCB lent and disbursed loans to 1,366 customers including 710 individuals and 656 organizations while Lan and her accomplices borrowed as many as 2,500 loans with a total disbursement of more than VND1 quadrillion, accounting for 93% of the total loans that the bank had granted.

The sum was 10.7% of Vietnam’s GDP last year, which was $409 billion.

By 2022, 875 of Lan’s customers had a total outstanding debt of more than VND677 trillion at SCB and all of them were listed as bad debts.

According to the investigator's agency, Lan and Van Thinh Phat staff established thousands of legal entities, hired thousands of individuals to act as representatives and put their names on loan applications to take out a huge amount of loans without being inspected.

In 2020, in order to evade inspection by the central bank, Lan requested SCB leaders to set up three units with lending functions at its head office, which were the wholesale customer business center, the direct business channel of the corporate sector, and the direct business channel of the personal finance sector.

In reality, all three units worked to disburse loans to Lan. Since their establishment in 2022, they have disbursed almost 400 loans to Lan and currently have an outstanding debt of VND185 trillion.

In order to legalize the withdrawals and avoid being traced, Lan directed SCB officials to transfer disbursed money to Van Thinh Phat’s ghost companies before she withdrew the money in cash.

When the due date came and she could not pay the loans, she created fake loan applications.

As police found out, from February 2018 to October 2022, she had appropriated as much as VND304 trillion ($12.53 billion).

The Ministry of Public Security recommended last week that Lan be charged with a variety of crimes, including bribery, violating banking regulations, and embezzlement.

It assessed Lan's violations as "extremely elaborate, meticulous, with detailed and carefully prepared scripts."

Eighty-five other people were included in the recommendation for similar alleged crimes and appropriation of property via abuse of trust.

Lan was arrested in October last year along with three other alleged accomplices. Many others have also been arrested since for involvement.

Five officials of the State Bank of Vietnam were arrested in March for their involvement in Lan’s case.

Police are now searching for two former SCB chairmen and five of their subordinates. Among them, one is a Chinese national, and one is a Canadian citizen.

The value of Lan’s asset appropriation, estimated at $12.53 billion, is equivalent to around 6% of Vietnam's current GDP, and 11% of the country's total outstanding property loans. The figure is larger than the market capital of most banks in Vietnam, with the exception of Vietcombank.