A lesson from Vietnam: Do not trust your banker
First a bit of context:
As the USA and China are not exactly close buddies lately, we see investors shifting some of their money and industrial supply chains towards Vietnam, away from its big brother in the North.
But their new playground may not seem as stable as they thought though...
Why I hear you ask?
Well, in general, Vietnam's banks already suffer from very low public confidence and they also have high levels of non-performing loans. There is also a total lack of international auditing.
On top of that rather dark banking picture, we witnessed property developer Truong My Lan being sentenced to death recently for her role in Vietnam’s biggest-ever fraud case.
As a result of her financial fraud (ongoing for years), the State Bank of Vietnam (their central bank) had to initiate a rescue operation and inject 24 billion USD of 'special loans' into the infected bank Saigon Joint Stock Commercial Bank (SCB) to keep her afloat.
According to the prosecutors, the total damages caused by the scam amounted to 27 billion USD by the way...
To put things into perspective, that is about 6% of the GDP of Vietnam, a country of about 100 million people.
Or how about this comparison? That is the kind of money that major governments on average spent rescuing lenders during the global financial crisis...
So what do we learn from this?
Never trust your banker :)
Some cool facts about the trial:
Documents related to the trial were kept in 105 boxes and weighed 6 tonnes.
More than 1,000 properties belonging to Lan have been seized.
Nearly 2,700 individuals were summoned for the trial, which included 200 lawyers.