30 July, 2012
Although considered by some as one of the potential financial tigers of Asia, Vietnam is still struggling to attract its desired level of foreign investment. Many foreign companies have been put off investing because of corruption and other factors. Despite regulations in place to combat corruption, at the end of 2011 Vietnam was ranked 112 out of 183 countries on the CPI index.
The key sources of anti-corruption law in Vietnam are the 2005 Law on Anti-Corruption and the Penal Code. Each has its own implementing legislation and is supplemented from time to time by regulations issued by the Government and the Prime Minister.
The main governmental bodies in charge of anti-corruption activities are the Central Steering Committee for Corruption Prevention; the Government Inspectorate; the State Audit and the Ministry of Police.
Vietnam is a signatory to the United Nations Convention Against Corruption and has also entered into regional anti-corruption agreements with Laos and Cambodia. In addition, the government has also drawn up a “National Anti-Corruption Strategy Towards 2020” which sets out the government’s goals for the next eight years.
Recent international corruption cases
The UK’s Serious Fraud Office and the Australian Federal Police have alleged that the former deputy chairman of Securency conspired in 2003 to pay for the son of the then governor of Vietnam’s state-owned bank to attend Durham University in order to secure contracts awarded by the State Bank of Vietnam for the production and supply of bank notes. He pleaded not guilty on 2 March 2012 at Southwark Crown Court. A trial has been set for November 2012. The former deputy chairman, whose next court appearance is in September, remains on unconditional bail. This case is of particular interest as it has involved a high degree of international cooperation between corruption prosecutors around the world.
The SEC charged California-based telecommunication solutions provider Veraz with alleged violations of the books and records and internal controls provisions of the FCPA in connection with improper payments to government officials in Vietnam following the company’s IPO in April 2007. On 29 June 2010, Veraz consented to the entry of a final judgment without admitting or denying the SEC’s allegations and was ordered to pay a US$300,000 civil penalty.
Recent domestic corruption cases
On 18 October 2010, a Vietnamese former deputy director of the Ministry of Transportation was sentenced by a Vietnamese court to life imprisonment for accepting a bribe from a Japanese company to secure contracts for road projects including the East-West Highway project. In September 2011, this sentence was reduced to twenty years on on appeal.
For further information, please contact:
Mark Johnson, Partner, Herbert Smith