Court hands down 30 year sentence to former bank executive

The HCM City People’s Court has upheld a 30-year prison sentence for Phạm Công Danh, a former bank executive, for his wrongdoings and violations of banking rules. - Photovnexpress.net

The sentence was announced yesterday after nearly two months of trials and deliberations.

Danh, the ex-Chairman of the Việt Nam Construction Bank (VNCB) Board of Directors, Chairman of the Board of Members and General Director of the Thiên Thanh Group, was was found guilty by the HCM City People’s Court for illegally withdrawing more than VNĐ9 trillion (US$404 million), the biggest such loss brought to light in the country’s banking sector.

He was accused of “deliberately violating State regulations on economic management causing severe consequences” and “violating the lending regulations of credit institutions.”

The accused stood trial yesterday with 35 other defendants, including many of the bank’s executives.

Starting as a tile seller, Danh expanded his family shop into a company dealing with building materials, real estate and tourism before buying the small, debt-ridden Trust Bank in 2012. The bank was later renamed the Construction Bank, and was based in the Mekong Delta province of Long An.

Along with Danh, the court also upheld a sentence of 22 years in prison for Phan Thành Mai, another former general manager of the VNCB.

Others sentences of 20 and 19 years in prison were given to two former VNCB executives, Mai Hữu Khương and Hoàng Đình Quyết, respectively.

According to the indictment issued by the Supreme People’s Procuracy in July, after the State Bank of Việt Nam gave a nod to Trust Bank’s restructuring plan, Danh took over the failing bank and renamed it VNCB.

Danh abused his post as chairman of the VNCB Board of Directors and leader of Thiên Thanh Group to instruct his staff in the group and the bank to commit a range of violations.

From June-July 2013 and from February-April 2014, he asked his accomplices to sign false house rental contracts at 268 Tô Hiến Thành Street and 816 Sư Vạn Hạnh Street in Hồ Chí Minh City, with his two companies – Trung Dũng and Hương Việt.

He then guided the transfer of over VNĐ601 billion (roughly US$27 million) from VNCB to the two companies. The money was transferred via a private account and used to pay the interests of six companies under the Thiên Thanh Group, and the debts this group owed Hải Tiến Investment Development Company, and customer services.

From December 2012-March 2014, Danh and his accomplices set up false files and committed various violations of the lending regulations of credit institutions

VNCB was established by Trust Bank in May 2013. Trust Bank was operational for 23 years, with chartered capital of VNĐ3 trillion (US$142.85 million). In mid-2014, the SBV appointed new officials to VNCB after some former top executives at the bank were arrested for allegedly violating state regulations.

Apart from VNCB, other commercial banks owned by the SBV are Ocean Bank and GP Bank. The SBV acquired all three banks at zero đồng due to their ailing performances and failure to meet required charter capital increases.

Vietnam’s fragmented banking sector has undergone major reform in recent years, with stricter lending and debt classification, forced takeovers, numerous fraud investigations and the formation of a state-run asset management company to lend support.