Vietnam Falling Short in Tackling Corruption, Says Party Chief

Vietnam’s efforts to curb corruption have fallen short of expectations, the Communist Party said, as state media announced the detention of four officials at government-run Vietnam Railways.

Vietnam is prosecuting corporate corruption, with several high-profile trials leading to death sentences. Still, the anti-graft campaign has failed to meet the expectations of the country’s citizens, Communist Party general secretary Nguyen Phu Trong said in the text of a speech posted on a government website yesterday.

Graft exists in a number of sectors, including finance, banking, land and mineral management and public investments, he said. “Corruption is still a challenge and is one of the most pressing issues in society,” Trong said.

Authorities detained four officials at Vietnam Railways, including deputy general director Tran Quoc Dong, for alleged involvement in a 16 billion dong ($758,000) bribery case, the Tien Phong newspaper reported yesterday on its website, citing a source it did not identify.

The persistence of corruption across the country could deter future investment from overseas companies, according to Fred Burke, managing partner of Baker & McKenzie (Vietnam) Ltd. in Ho Chi Minh City.

“Corruption in Vietnam is a serious consideration for foreign investors,” Burke, who is the representative for the American Chamber of Commerce in Vietnam on the Ministry of Justice’s Advisory Council on Administrative Procedure Reform, said in an e-mail. “It comes up in all kinds of businesses. When the consequences in today’s super-compliance minded global enforcement environment are taken into account, the Vietnam stop on their itinerary may just not be worth it.”

Corruption Trials

Vietnamese courts held at least 278 corruption trials last year, while the state inspectorate uncovered at least 80 new fraud cases involving state funds, according to a government report in November that didn’t give comparable figures for previous years.

Vietnam has begun a probe into Vietnam Railways to verify media reports that officials allegedly received kickback money from a Japanese company involved in an elevated railway project in Hanoi, according to government statements. The major shareholders of the company, Japan Transportation Consultants Inc., are the consultancy arms of East Japan Railway Co. and Central Japan Railway Co., according to JTC’s website. JTC said it is cooperating with authorities on the issue and has formed a third-party panel to investigate the allegations, according to a company statement March 20.

Nguyen Dat Tuong, Vietnam Railways’s general director, declined to comment when contacted by Bloomberg News today by phone.

Duong Chi Dung, the former chairman of state-owned Vietnam National Shipping Lines, and Mai Van Phuc, its former general director, were sentenced to death by a Hanoi court in December after being found guilty of embezzlement.

The People’s Court of Ho Chi Minh City sentenced Vu Quoc Hao, the former general director of Agribank Financial Leasing Co. No. 2, and Dang Van Hai, the former chairman of a construction company, to death in a fraud trial in November. Hao was charged with embezzling $25 million of state property.

To contact Bloomberg News staff for this story: John Boudreau in Hanoi at jboudreau3@bloomberg.net; Diep Ngoc Pham in Hanoi at dpham5@bloomberg.net

To contact the editors responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net K. Oanh Ha

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