HANOI (AFP) – A multi-billion-dollar fraud scandal involving one of Vietnam’s most prominent tycoons exposed systemic weaknesses in the country’s banking sector, said analysts who warn other such cases could yet emerge. Judges on Tuesday upheld the death sentence of property developer Truong My Lan, who was convicted this year of embezzling vast sums from the Saigon Commercial Bank (SCB), which she controlled, having borrowed from tens of thousands of small investors. Corruption is extensive in Vietnam, which ranked 83rd out of 180 in Transparency International’s most recent Corruption Perception Index. But the monumental scale of Lan’s crime was unprecedented, with the USD27-billion in losses prosecutors said she caused equivalent to Bosnia’s entire annual gross domestic product. Banking experts fear other damaging allegations are lurking in hidden recesses of the financial sector of the fast-growing economy, which is seen as a favoured destination for foreign investors. “SCB is not a single problem, it is an illness of the whole economy,” banking expert Bui Kien Thanh told AFP . The Vietnamese financial system was “characterised by a lack of tight state management”, he said. “Similar issues are rampant in society, so (Vietnam) needs to study and fix the problem before others arise.” Experts said a key systemic weakness is in the regulation of the corporate bond market, where companies borrow money from investors. In most developed markets, bonds are issued through independently regulated brokers on the basis of a full prospectus, graded by ratings agencies, and traded on stock exchanges. But SCB, through its branches, misleadingly sold its bonds directly to retail customers, with staff trained for weeks on how to falsely reassure them their money was secure and the investment carried little risk. Tens of thousands of people invested their savings in the bonds and lost everything when the bank collapsed and had to be bailed out by authorities, some of them contemplating suicide. Most Vietnamese company debt is not rated for creditworthiness at all, with local ratings agency FiinRatings saying there were no corporate bonds with credit ratings in the country in the years before Lan’s arrest. That compared with an average of around 50 per cent across the 10-member ASEAN. According to state media, a judge at Lan’s original trial asked police to look into the role played by staff at three of the world’s biggest accounting firms that audited SCB’s books – Ernst and Young, Deloitte and KPMG. None of the three responded to requests for comment by AFP . At every level of the Vietnamese financial sector – from employees on the ground to regulatory authorities – there is a lack of training on financial markets, the risks involved and regulatory obligations, Thanh said. On paper, Lan owned just five per cent of shares in SCB, but at her trial, the court concluded that she effectively controlled more than 90 per cent through family, friends and staff who were asked to hold stocks on her behalf. She then used her position to direct SCB management staff to withdraw money from the bank, over time transporting the equivalent of USD4.4 billion in cash in trucks to her home and the offices of her Van Thinh Phat property firm. “They don’t question the paperwork... they just say, how are we going to do it? How fast can we do it?” said economist based in the United States Khuong Huu Loc. “The whole system is a game based on collusion,” he added. “The problem is, it gets so bad, (but) people let her continue on because you don’t want to open the can of worms.”Former Indian prime minister Manmohan Singh has died at the age of 92. Singh was one of India’s longest-serving prime ministers and he was considered the architect of key liberalising economic reforms, as premier from 2004-2014 and before that as finance minister. He had been admitted to a hospital in the capital Delhi after his health condition deteriorated, reports say. Among those who paid tribute to Singh on Thursday were Prime Minister Narendra Modi, who wrote on social media that “India mourns the loss of one of its most distinguished leaders”. Modi said that Singh’s “wisdom and humility were always visible” during their interactions and that he had “made extensive efforts to improve people’s lives” during his time as prime minister. Priyanka Gandhi, the daughter of former prime minister Rajiv Gandhi and a Congress party member, said that Singh was “genuinely egalitarian, wise, strong-willed and courageous until the end”. Her brother Rahul, who leads Congress, said he had “lost a mentor and guide”. Singh was the first Indian leader since Jawaharlal Nehru to be re-elected after serving a full first term, and the first Sikh to hold the country’s top post. He made a public apology in parliament for the 1984 riots in which some 3,000 Sikhs were killed. But his second term in office was marred by a string of corruption allegations that dogged his administration. The scandals, many say, were partially responsible for his Congress party’s crushing defeat in the 2014 general election. Singh was born on 26 September 1932, in a desolate village in the Punjab province of undivided India, which lacked both water and electricity. After attending Panjab University he took a master’s degree at the University of Cambridge and then a DPhil at Oxford. While studying at Cambridge, the lack of funds bothered Singh, his daughter, Daman Singh, wrote in a book on her parents. “His tuition and living expenses came to about £600 a year. The Panjab University scholarship gave him about £160. For the rest he had to depend on his father. Manmohan was careful to live very stingily. Subsidised meals in the dining hall were relatively cheap at two shillings sixpence.” Daman Singh remembered her father as “completely helpless about the house and could neither boil an egg, nor switch on the television”. Singh rose to political prominence as India’s finance minister in 1991, taking over as the country was plunging into bankruptcy. His unexpected appointment capped a long and illustrious career as an academic and civil servant – he served as an economic adviser to the government, and became the governor of India’s central bank. In his maiden speech as finance minister he famously quoted Victor Hugo, saying that “no power on Earth can stop an idea whose time has come”. That served as a launchpad for an ambitious and unprecedented economic reform programme: he cut taxes, devalued the rupee, privatised state-run companies and encouraged foreign investment. The economy revived, industry picked up, inflation was checked and growth rates remained consistently high in the 1990s. Manmohan Singh was a man acutely aware of his lack of a political base. “It is nice to be a statesman, but in order to be a statesman in a democracy you first have to win elections,” he once said. When he tried to win election to India’s lower house in 1999, he was defeated. He sat instead in the upper house, chosen by his own Congress party. The same happened in 2004, when Singh was first appointed prime minister after Congress president Sonia Gandhi turned down the post – apparently to protect the party from damaging attacks over her Italian origins. Critics however alleged that Sonia Gandhi was the real source of power while he was prime minister, and that he was never truly in charge. The biggest triumph during his first five-year term was to bring India out of nuclear isolation by signing a landmark deal securing access to American nuclear technology. But the deal came at a price – the government’s Communist allies withdrew support after protesting against it, and Congress had to make up lost numbers by enlisting the support of another party amid charges of vote-buying. A consensus builder, Singh presided over a coalition of sometimes difficult, assertive and potentially unruly regional coalition allies and supporters. Although he earned respect for his integrity and intelligence, he also had a reputation for being soft and indecisive. Some critics claimed that the pace of reform slowed and he failed to achieve the same momentum he had while finance minister. (BBC News) Save my name, email, and website in this browser for the next time I comment.
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