Is Vietnam’s clampdown on corruption genuine?

The Vietnamese government appears to have clamped down hard on corruption, but there are question marks about its motivations.

By John Pennington

The Vietnamese government recently mounted a big anti-graft campaign. The government claimed the extensive campaign was part of its bid to rid the banking sector of corruption, reform the public sector, and improve its global image. It went after corrupt officials and took down some of the biggest offenders.

After the arrest of Ninh Van Quynh, the deputy head of state-run PetroVietnam, the government claimed that “dozens of bankers and businesses” were involved in a massive fraud case. Quynh is one of the several people accused of breaking the law by investing money in the state-owned and run Ocean Bank, some of whose bankers are also on trial.

The scale of the trial – 20 days, 50 defence lawyers and more than 700 witnesses – was unprecedented. The government listed 500,000 people and 400 businesses as beneficiaries of illegal interest payments from Ocean Bank. Those businesses included subsidiaries of PetroVietnam and shipbuilder Vinashin.

Corruption in Vietnam is rife

Vietnam occupied a position of 113th out of 176 on Transparency International’s corruption perception index. Its position has barely changed year-on-year. Huynh Phong Tranh, then chief of the Government Inspectorate, made a comment in 2014 about corruption in the country reaching “a level of stability”.

 

Source: Transparency International

He attempted to put a positive spin on a desperate situation. The media did a better job of exposing corruption than the government. Times have changed, and rhetoric will no longer suffice.

Trinh Xuan Thanh’s case raised questions about the government’s real motivations

While the previous administration cleared former PetroVietnam official Trinh Xuan Thanh, the current regime kidnapped him to bring him to justice. He stood accused of causing losses of US$150 million.

The government claimed Thanh voluntarily gave himself up last month. His rapid abduction and extradition angered German officials. Germany expelled Vietnam’s intelligence chief. A spokesman said the move, “has the potential to negatively affect relations massively.”

However, as a former political ally of former Prime Minister (PM) Nguyen Tan Dung, Thanh’s treatment raised questions about whether the government’s actions were politically motivated.

Dung’s rival, Nguyen Phu Trong, drove the campaign

The government acted on allegations of misconduct between 2010 and 2014 – when ousted Politburo member Dinh La Thang headed PetroVietnam. Thang is a former secretary of the Communist Party of Vietnam (CPV) of Ho Chi Minh City.

Thang and Thanh were once close to Dung. Both were alleged to have used their close links with the ex-PM to benefit financially. Others the government has arrested include former trade and industry minister Vu Hay Hoang, former PetroVietnam chairman Nguyen Xuan Son, and ex-DongA Bank chairman Tran Phuong Binh.

In July, former Vietnam Construction Bank chairman Pam Cong Danh received a 30-year prison sentence for his part in US$405 million losses. The government deemed deputy trade minister Ho Thi Kim Thoa responsible for corruption at electricity firm Dien Quang Lamp and removed her.

However, it is not Dung or his successor, Nguyen Xhan Phuc, who was at the forefront of bringing these men and women to justice. CPV General Secretary Nguyen Phu Trong led the campaign. He may well have tried to consolidate his position by exposing and breaking down Dung’s network.

Sources: Forbes, Reuters, Straits Times, The Star, Vietnam News (1), Vietnam News (2), VN Express (1), VN Express (2)

The government’s anti-corruption drive may have little impact

Although the number of people involved and the amount of money lost is extraordinary, it is hard to see how much difference the government’s anti-corruption drive will make. Transparency International ran a survey in March and reported that more than half of respondents said the government was doing poorly in its fight against corruption.

The ruling party then stepped up its efforts. The drive has focused on PetroVietnam and the banking sector. However, there is an enormous amount of work to do to break down the culture of corruption that exists inside state-owned enterprises (SOEs).

“SOEs in Vietnam are something of a sacred cow,” Vietnam analyst Carl Thayer said. “They provide a patronage network for their managers, and they provide support for a network of political-economic relations. They are one source – a very important source – of entrenched corruption.”

The government knows it has more work to do. “More will come, you should wait,” warned Trong. He further added,  “Fighting and preventing corruption, waste and negativity are no longer handled slowly and case by case. It has become a movement.”

Even if the government’s intentions are good, its methods are flawed

These are uncomfortable times for the government. “The bind for the Communist Party is that they know corruption is an existential threat, the issue that could cause them to lose popular legitimacy, but they know that their own members are the ones who have been able to benefit the most from an economy stuck between the plan and the market,” related Southeast Asia analyst Zachary Abuza.

A drive to do something about corruption should engender a positive reaction. The public has little confidence in SOEs. In the short-term, bringing rule-breakers to justice can deliver results. It should act as a deterrent – especially since prosecutors are pushing for the death penalty – and prove that the government is turning policy into action.

However, the government used flawed methods. By forcing Thanh to return home, they soured diplomatic relations with a key European ally in Germany.

Another theory is that the anti-corruption drive was an attempt to focus attention on something other than economic problems, environmental disasters, and crackdowns on free speech. The government’s hasty actions and apparent disregard for the consequences suggest cleaning up the public sector was not their top priority. Trong set out to settle political scores and to boost his position under the pretext of carrying out much-needed reform.