Vietnam forges ahead with prosecution of most high-profile casualty of corruption crackdown

Vietnam is moving a step closer to bringing the most prominent political casualty of a sweeping anti-corruption campaign to trial less than two weeks after arresting him and taking legal action against scores of other officials at state energy giant PetroVietnam.

The Ministry of Public Security said Wednesday that Dinh La Thang, who served as the board chairman of PetroVietnam from 2006 until 2011, is charged with “deliberate violation of state regulations on economic management, causing serious consequences.”

The Supreme People’s Procuracy, Vietnam’s highest prosecutors' office, will rubber-stamp the charges before Thang stands trial on a yet-to-be-announced date. Six other former PetroVietnam officials are also facing charges of economic mismanagement and abuse of power.

On December 8, the country was riveted as the Ministry of Public Security arrested Thang, Vietnam’s once-rising political star, for a series of “serious” violations and mismanagement while he was head of PetroVietnam. He was kicked out of the then 19-member Politburo, the Party’s decision-making body, in May and later fired as the top leader of Ho Chi Minh City. The punishment handed down to him was the harshest to be meted out to a Politburo member in years, if not decades.

Dinh La Thang in a file photo.

The Ministry of Public Security said Wednesday it has wrapped up its 12-day investigation into Thang’s wrongdoings, holding him accountable for economic mismanagement linked to investment losses in the scandal-hit OceanBank. It said since his arrest, Thang has ducked responsibilities, hindered the investigation, and not shown any signs of repentance.

Thang has been blamed for an excessive stake purchase in OceanBank. PetroVietnam held a VND800 billion ($35 million) stake in the bank, but that was completely written off when the central bank took it over in 2015. According to investigators, despite OceanBank’s “small and inefficient” operations back in 2008, Thang, as PetroVietnam chairman, plowed ahead with pumping VND800 billion into the bank without appraising it and reporting the venture to the then Prime Minister Nguyen Tan Dung.

At the headline-grabbing OceanBank trial that concluded in September, the defense lawyer for Nguyen Xuan Son, who was PetroVietnam’s chairman from 2014 until his arrest in 2015, said his client had just been enforcing executive orders already sanctioned by Thang when the latter was at the helm of the state energy giant. Son was sentenced to death on charges of embezzlement, abuse of power and economic mismanagement.

The lawyer essentially argued that it was Thang that signed off on documents that authorized OceanBank to function as the de facto internal institution tasked with exclusively handling all financial transactions for PetroVietnam.

Since Thang’s arrest, the corruption crackdown, spearheaded by Communist Party chief Nguyen Phu Trong, has also ensnared a slew of PetroVietnam bigwigs, highlighting how mismanagement has permeated the national oil and gas group from top to bottom.

Also on Wednesday, Phung Dinh Thuc, who served as PetroVietnam’s general director and chairman between 2008 and 2014, was charged with economic mismanagement in several loss-making projects, including a thermal power plant, a textile plant and several biofuel projects.

He was also held responsible for the promotion of two executives who have been caught up in serious legal turmoil, the notorious fugitive Trinh Xuan Thanh and Nguyen Xuan Son, the former PetroVietnam chairman now on death row.

Trinh Xuan Thanh was chairman and general director of PetroVietnam Construction JSC (PVC) between 2007 and 2013. He is facing charges of embezzlement and economic mismanagement, causing losses of around VND3.2 trillion ($147 million) at PVC. In early August, Thanh “turned himself in” after a 10-month international manhunt. 

January will witness two major cases emblematic of how the oil and banking sectors are at the heart of Vietnam's corruption crackdown.

A court in Ho Chi Minh City will be hearing a case involving 46 banking execs and staff on January 8 for alleged violations of economic regulations that resulted in VND9 trillion ($400 million) going missing from the banking sector. Trinh Xuan Thanh will also be brought to trial at another yet-to-be announced date also in January.

The scheduled dates of these trials show how Vietnam is looking to swiftly punish high-profile individuals as part of its ongoing anti-graft move.

But “harsh prison sentences and even the death penalty will only have a marginal impact on curbing grand corruption,” Carl Thayer, an Australia-based veteran Vietnam analyst, said. “Resorting to hard sentences is like a medical booster shot, it wears off over time,” Thayer said.

The bottom line is the fight against deep-rooted graft in Vietnam requires a political sledgehammer to fix a badly broken system, leaving no room for the “kill the chicken to scare the monkeys" approach, analysts say.

“Corruption is like Hydra, a nine-headed serpent-like snake in Greek Mythology in which it was said that if you cut off one hydra head, two more grew back,” Dennis McCornac, a professor of economics at Loyola University in Baltimore (Maryland), said.

“Perhaps the new heads are not as large or powerful as the one cut off, but they emerge nevertheless,” he said. “The only way is to address the issue at all levels.”