Death sentences fail to inspire financial-sector confidence

The harsh sentences meted out this week in Vietnam's biggest fraud trial are unlikely to restore confidence in the banking sector because of continuing endemic corruption and the absence of an effective regulatory framework, according to industry sources.

Local bankers and economists said the case had severely damaged confidence in Vietnam's emerging banking sector, and that as much as US$3 billion in much-needed capital remained locked away in Vietnamese homes as a result.

Despite the harsh sentences there was a strong perception that bankers were criminals, said one Vietnamese economist.

At the moment there is very poor supervision of transactions and a lack of expertise means questionable transactions often went unnoticed, he said.

More sentences are expected to be handed down in the coming week after the Ho Chi Minh City People's Court condemned six men to death on Wednesday for their role in the embezzlement from four state-controlled banks of $280 million.

Prosecutors had sought the death penalty for eight of the 77 people on trial, which involved an elaborate conspiracy between prominent businessmen and senior state employees in order to access loans to fund a series of speculative land deals.

Among those sentenced to death was Lien Khui Thin, head of Epco, a former State-controlled trading company, and senior banking executives Pham Nhat Hong and Nguyen Ngoc Bich.