Monday, June 30, 2014

Graft-busting in Vietnam

GOOD luck to those who won’t bribe in Vietnam: cash-stuffed envelopes are a mainstay of the country’s economy. Some foreigners use them to kickstart business ventures. Many doctors, teachers and traffic policemen expect them. Online, speculation swirls among ordinary Vietnamese about corruption at the highest levels of government.

The ruling Communist Party knows how bad this looks. Since 2005 it has rolled out one anti-graft campaign after another. Few have hit their mark. Yet, in recent months, its anti-corruption drive seems to have stepped up a gear. Last December two former officials at Vinalines, a state-owned shipping firm, were sentenced to death for embezzlement. This spring Nguyen Duc Kien, a co-founder of Asia Commercial Bank, one of Vietnam’s largest, was sentenced to 30 years in prison for fraud and tax evasion. And officials at the state-run Vietnam Railways were detained on allegations of accepting $780,000 in bribes from a Japanese firm. (Japan, which is Vietnam’s largest donor, announced this month that it would suspend development aid until the government cleans up its act.)

A state-dominated economy can easily open the way for corruption. That is partly why the prime minister, Nguyen Tan Dung, is urging the privatisation of hundreds of state-owned enterprises (SOEs). The optimistic view is that asset sales by SOEs, along with more graft-busting, may prove a tonic for its sluggish economy.

But for all Mr Dung's talk of economic reform, business people expect foot-dragging. Banks are wobbly, burdened with huge quantities of bad loans. And SOEs may be reluctant to go public for fear of exposing how little they are actually worth.

The economy, meanwhile, is sluggish. An annual business survey, sponsored by USAID, declared that confidence among foreign and domestic businesses in Vietnam sank to “historic lows” last year—well before an unusual spasm of rioting ripped through some foreign-owned factories in May. The government reported on June 27th that the economy grew by 5.18% in the first half of 2014, a slight rise from the same period last year. But that is hardly good enough for a developing country of 90m with a young, restless workforce.

Busting graft should now be more of a priority than ever. Yet Jairo Acuña-Alfaro, policy advisor for public administration reform at the United Nations Development Programme, says that Vietnam's anti-graft campaigns over the past decade have been largely ineffective. The vast majority of corruption trials ended with slaps on wrists in the form of warnings or suspended sentences.

The recent tougher sentences are anomalies. But some spy political manoeuverings rather than a fresh burst of reform. Mr Kien, a flamboyant tycoon and football-club owner, is thought to be a close associate of Mr Dung, who may have his eye on another high-level party position after his prime ministerial term ends in 2016. Mr Kien’s arrest in 2012 triggered a run on deposits at his bank and rattled investors. A popular rumour in Hanoi has it that Mr Dung’s critics went after one of his right-hand men in order to shake his power base.

Even the party’s general secretary, Nguyen Phu Trong, admitted last month that the government was not fighting graft with as much gusto as many Vietnamese expect it to. Vietnamese elites are not in the habit of openly accusing party bigwigs of corruption. There was a hint of that in January when, after being sentenced to death, a former chairman of Vinalines blurted out to a court that he had paid more than $1.5m in bribes to a deputy minister who had been investigating him. The accused, Pham Quy Ngo, was a member of the party’s elite central committee. He died soon after denying the allegation, apparently of late-stage cancer. Authorities cancelled a planned investigation into his affairs, leaving yet more rumours to swirl.


No comments:

Post a Comment