Vietnam's huge fraud case raises questions about banking system

Analysts fear more cases could emerge, as death sentence for tycoon is upheld

HANOI 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 warned that other such cases could emerge.

Judges on Dec 3 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 Perceptions Index.

But the monumental scale of Lan's crime was unprecedented, with the US$27 billion (S$36.3 billion) in losses prosecutors said she caused equivalent to Bosnia's entire annual gross domestic product.

Banking experts fear that 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 who are looking for an alternative to China.

"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.