Vietnam will extend its anti-graft drive as police reveal real estate fraud worth 3% of GDP. After police uncovered financial scams in the real estate industry worth more than 3% of the country’s GDP, Vietnam’s top leader pledged to continue an anti-corruption drive “for the long term” that has had a chilling impact on the economy.
Although there has been a campaign against graft since 2016, it took off last year when the Communist-ruled nation’s authorities launched a heavy-handed investigation into several high-profile cases of corruption and fraud involving prominent state officials and business leaders.
As stated late on Wednesday by Nguyen Phu Trong, the general secretary of the Communist Party, “we need to conduct the anti-corruption fight faster in a more efficient manner,” according to official media.
“We won’t stop here, but we will continue for the long term,” he declared. Following months-long investigations into two financial scandals, the police revealed the results, which for the first time revealed the extent of the fraud—worth a combined $12.8 billion, or 3.2% of the economy—and Trong made these statements.
The investigation’s findings, which were made public on Sunday, indicate that in the larger of the two scandals, Truong My Lan, the chairwoman of the real estate developer Van Thinh Phat Holdings Group, and her allies stole 304 trillion dong ($12.54 billion) from Saigon Joint Stock Commercial Bank.
When My Lan was detained in October of last year, the case became well-known and caused a crisis in the corporate bond market and the real estate industry. My Lan is suspected of issuing huge bonds, violating the law.
The “blazing furnace” anti-graft effort, which has been intensified and is evocative of campaigns in China’s neighbor, has been perceived as exacerbating the scandal’s detrimental economic effects. It has paralyzed many ordinary transactions as officials fear becoming embroiled in investigations.
The extent of the theft was unknown until this past week, and financial experts are now concerned about how it may affect the banking industry. The extent of the scandal, according to J.P. Morgan Research, may result in tighter enforcement of banking regulations, raising lending costs and perhaps delaying growth.
As the percentage of non-performing loans rose in September, the Asian Development Bank warned about possible banking-related fallout from the real estate sector crisis.
According to a rating agency that is a part of Moody’s, listed real estate developers in Vietnam are under increased pressure to pay off their sizable debts as profitability and cash reserves reached their lowest levels in over five years.
In a separate scandal, police late on Wednesday charged Tan Hoang Minh Group chairman with raising 8.6 trillion dong ($354.64 million) illegally by issuing bonds to 6,600 investors. This also provided the first indication of the scandal’s scope, which had been previously reported.
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