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Vietnam Paints Billionaire’s Death Sentence as a Victory for Clean Governance. It’s Not

It’s Southeast Asia’s biggest ever fraud, amounting to $12.5 billion and embroiling some of Vietnam’s top bankers and officials. And on Thursday, a Ho Chi Minh City court reached its verdict: a death sentence for Truong My Lan, a highflying 67-year-old businesswoman who began life hawking cosmetics from a market stall in the southern city before in 1992 founding Van Thinh Phat, a sprawling company which developed luxury apartments, offices, hotels, and shopping malls.

In 2011, Lan was enlisted to shepherd the merger of the troubled Saigon Joint Commercial Bank, or SCB, with two other lenders in a plan overseen by the Vietnam Central Bank. But until her arrest in 2022, she stands accused of using SCB as her personal piggybank, embezzling billions via illegal loans to herself and confederates through thousands of shell companies at home and overseas. The verdict is the first death sentence for a private businessperson for financial crime.

The case has sent shockwaves through Vietnam’s business community and is the highest profile collar of Communist Party General Secretary Nguyen Phu Trong’s sweeping “Blazing Furnace” anti-corruption campaign. The full impact of Lan’s sentence—a family member told Reuters she intends to appeal—is not yet known though there are clear implications for international firms looking to Vietnam as they diversify supply chains away from China.

“This trial is probably the exemplar of Vietnam’s effort to crack down on corruption not only in the state sector but also in private spaces,” says Nguyen Khác Giang, a visiting fellow at the Vietnam Studies Program of the ISEAS-Yusof Ishak Institute in Singapore.

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That Vietnam sought to make an example of Lan was clear. A guilty verdict in the trial that began just weeks ago may never have been in doubt, as befits a one-party autocracy, but this was no shadowy judgment far from public view. Lan was tried alongside 84 defendants, including her husband (who was sentenced to nine years in prison), close relatives, 45 SCB staff (including three executives given life prison sentences), 15 former officers from the Vietnam State Bank, three officials from the Government Inspectorate and one from the State Audit Office. Proceedings involved 10 state prosecutors, some 200 lawyers, and 2,700 witnesses. Evidence filled 104 boxes and weighed six tons. Local media were provided detailed briefings by party cadres typically schooled in deep secrecy.

“The defendant’s actions not only violate the property management rights of individuals and organizations but also put SCB under scrutiny, eroding people’s trust in the leadership of the Party and State,” state newspaper VnExpress cited the jury as saying, reports Reuters.

Vietnam is keen to paint the verdict as a victory for clean governance. Under Trong, Vietnam’s corruption’s ranking has steadily improved, leading to a glut of foreign direct investment. Samsung, LG, and Apple are among many foreign firms to have plowed billions into hi-tech manufacturing in Vietnam, powering ambitious plans to transform the once war torn Southeast Asian nation of 100 million into an upper-middle-income economy by 2030 and a high-income economy by 2045. The Hanoi government is also promoting domestic champions like VinGroup, whose VinFast electric vehicle subsidiary is building a $4 billion factory in North Carolina.

“In the long run, if they can clean up the market, removing toxic and illegal business practices, that will be good for the economy as a whole and something that investors should welcome,” says Le Hong Hiep, a senior fellow at the ISEAS-Yusof Ishak Institute.

Yet the scale and brazenness of Lan’s crimes leave many questions unanswered. She was, after all, someone who built a vast real estate empire in a Leninist country where all land officially belongs to the state. That cannot happen without elite connections and protections. According to prosecutors, Lan’s loans made up 93% of all SCB’s lending, while over a period of three years she is accused of withdrawing the Vietnamese cash equivalent of $4 billion and storing it in her basement. The fact that not a single senior party official numbered among her copious conspirators beggars credulity. “I can’t believe the party apparatus and Ho Chi Minh City wasn’t culpable and involved,” says Carlyle Thayer, emeritus professor at the University of New South Wales in Australia.

In truth, the party portion of the purge was likely already in motion—quietly, far from view, and for another, earlier scandal. In March 2020, Vietnam’s Inspection Committee recommended disciplinary action against two party chiefs in Ho Chi Minh City—Le Thanh Hai, Secretary of the city’s Party Committee and known as “Boss Hai;” and Le Hoang Quan, a former head of the city’s Standing Committee—over alleged serious violations related to a vast development project in Vietnam’s largest municipality.

This influential pair very likely steered Lan’s meteoric rise and her subsequent fall from grace. Why they (or anyone else in Ho Chi Minh City) have so far not been further implicated in Lan’s crimes remains a contentious topic, though with both already punished, the party probably decided against washing more dirty linen in public. Not least since the purge of two Presidents amid graft allegations in just one year has already raised unwelcome scrutiny on official malfeasance.

Still, the draconian punishment handed to Lan is already having effects, with businesses complaining of “bureaucratic paralysis” due to officials now too scared to do their jobs. “Even approving a new project will take a lot of time because people are really afraid of making decisions,” says Giang. Hiep, meanwhile, suggests Lan’s death sentence may well be counterproductive and overturned on appeal. “The main point now is to recover the losses and maintain investor confidence in the judicial system and the economy,” says Hiep. “And giving her a death sentence does not help in either regard.”

Of course, boosting investments in Vietnam is something championed by Washington, which in September elevated bilateral ties to a Comprehensive Strategic Partnership when President Joe Biden visited Hanoi. Vietnam is now Apple’s largest manufacturing hub outside of China and where the Cupertino behemoth produces iPads, AirPods, and Apple Watches. Last month, Secretary of State Antony Blinken welcomed Vietnamese Foreign Minister Bui Thanh Son to Washington, D.C., where they vowed to expand cooperation in semiconductors, supply chain diversification, and stability and prosperity in the South China Sea.

Today, countering Beijing’s regional assertiveness takes precedence for the U.S. Yet Lan’s fate shows that China and Vietnam remain at their core very similar beasts. On Thursday, more than 60 human rights and environmental rights organizations wrote a letter to Apple to highlight the Sept. 15 detention of Ngo Thi To Nhien, the executive director of the Vietnam Initiative for Energy Transition, an independent think tank focused on green energy policy—the latest in an ongoing crackdown on environmentalists.

“All these companies say they are ‘de-risking’ their supply chains by moving out of China to Vietnam,” says Phil Robertson, deputy Asia director for Human Rights Watch. “But what are they really supporting? Companies with very fancy codes of conduct are investing in a country where human rights abuses are systematic and pervasive.” Lan’s case shows that while America’s rivals have changed, Vietnam’s autocracy remains distinctly unruffled.

“I don’t think this will increase trust in the system,” says Alexander Vuving, a professor at the Asia Pacific Center for Security Studies in Hawaii. “For the business community, this is just another example of [officials] fighting each other, corruption, and the unpredictability of the environment.”

Write to Charlie Campbell at charlie.campbell@time.com.