A file photo of Vietnam Construction Bank's branch. Photo credit: Saigon Times Online
The Ministry of Public Security are seeking criminal charges against 49 people for allegedly cheating a local bank out of over VND18.68 trillion (US$817.45 million).
About one-third of the suspects are dismissed executives of Vietnam Construction Bank, which the central bank took over early this year following continued losses.
Pham Cong Danh, who was the bank's board chairman before the case was busted last July, allegedly devised different scams to steal from the bank, including setting up fraudulent companies to take out huge loans.
In 2012, the central bank was restructuring Trust Bank and rebranding it into Vietnam Construction Bank. Around 20 investors were allowed to join.
One of them was construction conglomerate Thien Thanh, for which Danh also served as a chairman, with a 80 percent stake. In September that year, Thien Thanh acquired a 9.67 percent stake in the bank.
Most of the other new investors were either companies founded by Danh or his relatives, according to investigators.
Danh ended up controlling more than 84 percent shares in Vietnam Construction Bank, said investigators in a report recently submitted to the country's top office of prosecutors.
Pham Cong Danh, dismissed board chairman of Vietnam Construction Bank, is accused of constructing scams to pocket more than US$817.4 million.
As the bank's de facto boss, Danh colluded with other executives, including CEO Phan Thanh Mai and director of the bank's Ho Chi Minh City branch Mai Huu Khuong, in faking documents to take money from its budget supposedly for funding system upgrade and new office projects.
He also founded a dozen of subsidiaries in the name of Thien Thanh Group to take out loans from the bank, using the group's assets including real estate Da Nang, which had already been put down as collateral for loans at other banks. The value of the assets was also inflated.
By the time the scams were discovered, they had withdrawn more than VND18.68 trillion in total from the bank, about half of which could not be retrieved, according to investigators.
Danh and his accomplices can be charged with "deliberately violating state regulations on economic management resulting in serious consequences," "violating rules on lenders' activities," "violating lending rules," and "dereliction of duty," if investigators' proposal is approved.
Among the suspects were four officials with the central bank who were tasked with supervising the construction bank's activities during the restructuring.
Under Vietnam's existing laws, they could be jailed for up to 20 years.
Established in 1989, Trust Bank started getting into problems in 2011 with increased bad debts, mainly in the real estate sector. The central bank then listed it among nine weak lenders in need of restructuring.
After the 2013 restructuring effort, Vietnam Construction Bank still suffered losses, and needed more fund, estimated VND3 trillion ($135.12 million).