There are some folks who think that foreign investors avoid us because we are too corrupt. But how can we explain Vietnam’s and Malaysia’s status as the current favorite destinations of investors when corruption is present there too?
Crime and punishment. The two countries punish corrupt leaders and business people. We don’t. We even lionize anyone with money and power, regardless of how they acquired both.
Two Vietnamese presidents were forced to resign in disgrace on suspicion of corruption. Malaysia sent a once-very-powerful prime minister and his co-accomplice wife to jail.
In our case, no big-shot politician has been punished for corruption. The only ex-president found guilty of plunder by the Sandiganbayan was immediately pardoned by his successor. Three senators were charged with participating in a scam involving the use of government funds they earmarked for some questionable foundations. Not one of them spent a single night in jail.
For the Duterte administration, the biggest scandal involved the purchase of medical supplies during the pandemic. A bidder with ties to friends of Duterte snared over P10 billion worth of contracts through questionable bidding procedures. The head of the bidding agency at that time is now facing a case before the Sandiganbayan. Duterte defended the awarding of contracts to Pharmally, an undercapitalized firm that was unduly favored.
But Philippine corruption cases seem penny ante compared to the latest Vietnamese corruption case. Property tycoon Truong My Lan, a 68-year-old businesswoman, just lost her appeal against the death sentence for masterminding one of the biggest frauds in global history, in which billions vanished from Vietnam’s financial system. She was accused of effectively turning a major bank into her own personal ATM.
A Ho Chi Minh City court imposed the death sentence on Lan in April for embezzling more than $12 billion—an amount equivalent to roughly three percent of Vietnam’s entire economy. In comparison, Malaysia’s long-running 1MDB state fund scandal, which involved its former Prime Minister Najib Razak, entailed the looting of about $4.5 billion.
If Ms. Lan pays $9 billion, her death sentence could be commuted to life imprisonment, state-run VnExpress International reported. She was tried with 85 others, including former central bankers and government officials, as well as previous executives of the Saigon Commercial Bank. Investigators accused her and dozens of accomplices of taking loans and cash through a web of thousands of shell companies over more than a decade.
It was felt that there’s no way Lan could have done what she did without official connivance. Her trial was publicly reported in state media and live-streamed outside the court in Ho Chi Minh City, deliberately designed to show the public that the government is following through on its crackdown.
“When you have corruption of this scale, it signals that things are bad in the country because it means legislation is not good, supervision is not good, and the financial system is actually quite vulnerable,” Nguyen Khac Giang, visiting fellow at the Vietnam Studies Programme of the ISEAS–Yusof Ishak Institute, told CNN. He also said that the court’s harsh sentencing shows the authorities’ commitment to making Vietnam more transparent and better placed to attract foreign investment.
The former Communist Party of Vietnam secretary general, Nguyen Phu Trong, launched a sweeping anti-corruption campaign – dubbed the “blazing furnace”– in 2016, which has led to the indictments of thousands of people, including party top brass.
Former NEDA Secretary Ciel Habito noted that “a strong top-down impetus to stop corruption is vital.” He thinks the establishment of anti-corruption agencies like Vietnam’s Central Steering Committee for Anti-Corruption was crucial, as it was empowered to investigate and prosecute cases without interference. But then again, we have the Ombudsman, except its seriousness in fighting corruption depends on the inclination of whoever heads the office.
In Vietnam, Habito pointed out, even the highest officials of government are not immune from investigation and punishment.
“In 2018 alone, over 60 officials were arrested on corruption charges, including politburo members, provincial leaders and CEOs of state-owned enterprises. Prominent among them was Trinh Xuân Thanh, former head of the PetroVietnam Construction Joint Stock Corp., who was sentenced to life imprisonment for embezzlement and abuse of power. With his case and others, the government sent a clear message that no one is above the law.”
As for Malaysia, it took a change in government to make its former Prime Minister Najib Razak take accountability for the 1MDB scandal. Razak prevented attempts to investigate the deal. After he lost an election, the new prime minister removed hindrances to a proper investigation. Razak was charged with criminal breach of trust, money laundering, and abuse of power in September 2018.
By Aug. 23, 2022, the Court of Appeal and the Federal Court upheld the conviction and sentence of Najib in all the cases, finding him guilty of misappropriation. On Sept. 1, 2022, Najib’s wife, Rosmah Mansor, was also found guilty of three counts of corruption by the Malaysian High Court and sentenced to both a ten-year term of imprisonment and a RM970 million fine.
Razak served a jail term, but his 12-year jail sentence for corruption was halved by Malaysia’s pardons board.
In Singapore, Subramaniam Iswaran, a senior cabinet minister, has been sentenced to 12 months in prison after pleading guilty to accepting gifts worth more than S$403,000 ($311,882) while in public office, as well as obstructing the course of justice. The gifts included tickets to the Formula 1 Grand Prix, a Brompton T-line bicycle, alcohol and a ride on a private jet.
Investors understand corruption exists everywhere. But the crime must be punished for them to trust their money in a country. A fair and corruption-free justice system is always an important consideration in decisions to invest in a country. Based on this measure, we seem doomed.
Boo Chanco’s email address is bchanco@gmail.com. Follow him on X @boochanco