Nguyen Duc Kien, a founder of Asia Commercial Bank, pleaded not guilty to fraudulently taking assets, tax evasion and other crimes that partly caused losses the Vietnamese lender estimates at 8.67 trillion dong ($411 million).
The People’s Court of Hanoi trial of Kien, former chairman Tran Xuan Gia, former chief executive officer Ly Xuan Hai and four other former ACB executives was adjourned on its first day after the court was told Gia was in the hospital. No new hearing date has been set.
Kien, who faces as long as life in prison on one of the charges, said earlier that he wanted the trial to continue despite Gia’s absence. The former executives of ACB, 15 percent owned by Standard Chartered Plc, face as long as 20 years in prison if convicted of another charge of intentionally violating state regulations on economic management.
The charges “could send a warning to other bank executives about misappropriation of funds,” said Fred Gibson, a Sydney-based economist at Moody’s Analytics. Foreign investors are still concerned about the regulation of Vietnam’s banking system, he said.
Highest Bad-Debt Level
Vietnam is stepping up measures to clean up its banking system as the highest level of bad debt among Southeast Asia’s biggest economies curbs lending and hurts businesses. The central bank in 2012 vowed to crack down on wrongdoing by controlling shareholders of banks., which it described as “the biggest obstacle” to reform.
The Ho Chi Minh City Stock Exchange’s benchmark VN Index (VNINDEX) slumped 2 percent today to the lowest close since March 4. It plunged 4.7 percent, the biggest loss in more than three years, on Aug. 21, 2012, the day following Kien’s arrest.
“Sentiment is dull given the ongoing trial,” said Attila Vajda, managing director at Project Asia Research & Consulting Pte. “People are afraid that a negative outcome might lead to a drop similar to that in 2012 when Kien was arrested, so they are cautious.”
ACB gained 0.6 percent in Hanoi trading today. Shareholders may be buying the stock to show confidence, Vajda said.
Kien and his family own 9 percent of ACB, which he founded with friends in 1994, according to a 2012 report in the national daily newspaper Tuoi Tre. He previously worked at Vietnam General Garment-Textile Corp., according to the report.
“I’m being charged with conducting illegal businesses while all my activities were given licenses by authorities,” Kien told the court today. He demanded that the court summon representatives from business registration offices and government ministries.
ACB has recovered 1.94 trillion dong or 22 percent of its losses from the alleged crimes, Deputy Chief Executive Nguyen Thanh Toai said by phone today. The Ho Chi Minh City-based lender will recover another 3 trillion dong this year, he said.
Jai Ganesh M., a Singapore-based spokesman at Standard Chartered, declined to comment the case, saying it was a legal matter not involving the London-based bank.
Late last year, three executives at state-owned Vietnam National Shipping Lines and Agribank Financial Leasing Co. No. 2 were sentenced to death for fraud in two separate trials.
To contact Bloomberg News staff for this story: Diep Ngoc Pham in Hanoi at email@example.com