Posted on 08/08/2006 9:10:33 PM PDT by Toidylop
By Bill Hayton
Vietnam Reporter, BBC News, Hanoi
There cannot be many places in the world where you can get shot for losing money on a foreign exchange deal, but Vietnam is one of them.
That is the situation potentially facing Nguyen Thi Quynh Van.
Until March this year, she was the deputy head of trade financing at a branch of one of Vietnam's biggest state-owned banks in the port city of Hai Phong.
Now she is under arrest, having been charged with, "losing state resources through economic mismanagement" - a crime that carries the death penalty in Vietnam.
She is alleged to have lost $5.4m (£2.36m) in a series of speculative currency deals with at least three foreign banks based in Vietnam - in particular the Dutch bank ABN Amro, one of the 20 biggest banks in the world.
But this is no simple tale of a rogue trader being brought to book.
This case is about where political power lies in modern Vietnam and ultimately about whether it can succeed in transforming itself from a country governed by the rule of the Communist Party into one governed by the rule of law.
Trying to find out exactly what is going on is extremely difficult.
Very few people will risk talking to the media either on the record or in private.
"This case is making representatives of foreign companies in Vietnam very nervous because there is such a lack of information," says Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi.
That is because the response of Ms Van's employers, the Industrial and Commercial Bank of Vietnam - Incombank for short - has been to sue ABN Amro for the return of the $5.4m.
Crime committed?
This case formally begins in a Hanoi court on Monday 14 August.
There are four members of ABN Amro's staff currently under arrest - and one of them, according to his supporters, has been held by the police without charge or access to a lawyer for four months.
The general manager of ABN Amro in Vietnam, a Vietnamese-American, has been banned from leaving the country.
The bank insists that both it, and its staff, are innocent.
"ABN Amro believes the trades [with Incombank] were valid and all the trades were settled," it says in a statement.
But Incombank insists that a crime has been committed.
"Many kinds of currency have been illegally withdrawn and it is our policy that once someone has intentionally caused damage to our company, they have to be responsible for the return of what they have taken," one official in the bank's legal department says.
Unusually quiet
At one level, the case rests on the interpretation of part of a directive issued by the State Bank of Vietnam seven years ago, but not implemented until last month.
Under Decision 101/QD-NHNN of 23 June 1999, foreign exchange dealers have to register with the State Bank of Vietnam.
But the Incombank official argues that did not happen.
"The people involved at our branch weren't registered, and persons at the other bank knew about this and still undertook transactions with them, so it's clear that they were wrong as well," the official says.
Foreign lawyers with knowledge of the case argue, however, that that part of the Decision was intended to apply to banks selling currency to the public - not to deals done between banks.
They point out that the State Bank only sent out a letter to banks asking them to register their traders last month, well after this case had become controversial.
The State Bank is remaining unusually quiet about the whole case.
No one is prepared to speak on the record.
"The State Bank is not taking part in the investigation because it is not the Bank's function," says a senior official, on condition of anonymity.
"It is the responsibility of the Police Economic Crime Department. We have to wait for the results of their investigation."
Virtually powerless
Privately, several people with knowledge of the case say they believe the State Bank has already carried out an internal investigation of the whole case and decided that ABN Amro had not broken any laws.
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People's impressions are that representatives of a foreign bank are being wrongly arrested and held hostage in order to protect staff in a state-owned bank who may be facing a firing squad
Foreign businessman, speaking on condition of anonymity
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So if that is true, why is the police pursuing the case?
The answer, according to foreign lawyers and bankers with knowledge of the situation, is that real power in Vietnam doesn't lie with the people and institutions that are formally given that power in law.
Real power still lies with the Communist Party, and that power responds to lobbying from state-owned institutions and individuals who have strong private connections with influential people.
So although the State Bank of Vietnam is formally responsible for financial regulation, it is virtually powerless in comparison with the Ministry of Public Security, which controls the police force.
And since the judicial system is similarly controlled by the Party, there is little expectation that the case will be settled on its merits in the courts.
Held hostage
All of this suggests that foreign companies might become rather more wary of doing business with Vietnamese state-owned businesses.
The chairman of the American Chamber of Commerce, Tom O'Dore, says in a recent statement that he is concerned by the "criminalisation of normal business transactions, and the lack of involvement by the State Bank in legal proceedings involving financial institutions".
"The first could freeze business in Vietnam," he says.
"The second could negatively impact Vietnam's financial markets in general - and foreign exchange markets in particular."
Legal experts in Hanoi say that in similar cases in the past foreign businesses have backed down and paid up, but ABN Amro appears to be digging in its heels for a fight.
The outcome could have profound implications both for doing business in Vietnam, but also for the fate of political and legal reforms in the country.
As one foreign businessman says: "People's impressions are that representatives of a foreign bank are being wrongly arrested and held hostage in order to protect staff in a state-owned bank who may be facing a firing squad."
Published: 2006/08/08 22:22:23 GMT
© BBC MMVI
"Privately, several people with knowledge of the case say they believe the State Bank has already carried out an internal investigation of the whole case and decided that ABN Amro had not broken any laws.For those still consider VN no longer under communists' rule!!!
So if that is true, why is the police pursuing the case?
The answer, according to foreign lawyers and bankers with knowledge of the situation, is that real power in Vietnam doesn't lie with the people and institutions that are formally given that power in law.
Real power still lies with the Communist Party, and that power responds to lobbying from state-owned institutions and individuals who have strong private connections with influential people."
the worst day of trading....really sucks.
There, that's better.
stinks to be her. Would the death penalty loom if she was a man?? interesting question?
On the other hand, a lot of people wish we could have done this to Enron.
Uhhh, yes he should be "concerned".
Gee. I just saw on the cover of THE ECONOMIST in the bookstore that the U.S. economy was slowing, while the Vietnamese economy was speeding up. I guess this explains it, cuz, you know, who wants to die?
Imagine what they would have done to Soros, had he done to Viet Nam what he did to Great Britian.
Mark
The Vietnamese saw what happened with the Privatisation of Eastern Europe and currently in China and they don't want to get screwed over.
The concept of "Face" is very important to the Vietnamese (not as important as in HK), so a government agency will never admit wrongdoing. You have to beat it out of them.
Warren Buffett's Rules of Trading:
Rule No. 1: Never Lose Money
Rule No. 2: Never Forget Rule No. 1
In spades in Nam apparently.
Obviously Vietnam is still run by commie lunatics.
"Obviously Vietnam is still run by commie lunatics."still run by commie lanatics! Who would da thunk? I've been reading some comments by American visiting VN recently, some declared VN is no longer a commie state!!! SIGH...
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