Former central bank bigwig dragged down into Vietnam's $400 million graft case

A criminal investigation has been launched into the former deputy governor of the State Bank of Vietnam to establish his role in a massive graft case that cost the country's banking sector VND9 trillion ($400 million).

Dang Thanh Binh, 63, has been placed under house arrest and is facing charges of "dereliction of duty, causing serious consequences".

Binh served as deputy governor of the State Bank of Vietnam from 2005 until he retired in August 2014.

Dang Thanh Binh, former deputy governor of the State Bank of Vietnam. Photo by VnExpress/Nhat Minh

Investigators from the Ministry of Public Security said he is accountable for massive losses at Vietnam Construction Bank (VNCB), the biggest ever fraud case to rock the country's banking sector. It did not elaborate on his culpability.

The criminal investigation comes a week after government inspectors issued a report highlighting violations that took place at the central bank between 2010 and 2015. They included turning a blind eye to staff that ignored banking protocol, failing to detect and warn of insolvency risks at weak lenders and refusing to follow anti-corruption regulations.

Binh’s charges is the latest punishment meted out by the Vietnamese government in the VNCB case so far, following a series of arrests and convictions over the past year.

A month ago, Vietnamese police also arrested 16 people, including banking tycoons and employees of various banks and companies, for helping former chairman of VNCB Pham Cong Danh to steal money from the bank, which was taken over by the government in early 2015.

Danh was sentenced to 30 years in jail last October, while 35 other former bank employees received up to 22 years behind bars.