How Van Thinh Phat–SCB fraud moved $44B

Between 2012 and October 2022, Truong My Lan orchestrated the disbursement of 2,500 loans totaling VND1 quadrillion through the Saigon Commercial Bank (SCB), as detailed by the Supreme People’s Procuracy of Vietnam amid charges of bribery, banking regulation violations, and embezzlement against her.

The sum of over VND1 quadrillion represents a colossal 93% of the total loans issued by SCB during this period. This amount equates to 22.6% of Vietnam’s GDP as of the end of September.

Repayment status remains uncertain, but records as of October of 2022 show that Lan, along with her cohorts, were responsible for at least 1,284 unpaid debts at SCB, amounting to VND677 trillion. Out of this sum, VND525 trillion has been confirmed as dispersed.

Lan retained control of 88% of the disbursed funds, which were either transferred to different banks or withdrawn in cash. The remainder, amounting to 12%, was allocated in part to settle SCB’s outstanding debts and in part was circulated among various SCB accounts.

While specifics of the fund’s utilization by Lan were not disclosed by the prosecutors, they noted that the funds were frequently circulated within accounts belonging to individuals and entities integrated into Van Thinh Phat’s corporate network, a tactic employed to evade financial scrutiny.

Lan managed approximately 1,000 untraceable entities, dubbed “ghost” companies, registered both within the country and internationally, all operating under the Van Thinh Phat umbrella. These entities served as conduits for the continuous flow of loaned funds.

The cash was frequently transported to either Lan’s residence or the Van Thinh Phat headquarters, both located in Ho Chi Minh City. The prosecutors have formally accused her of misappropriating VND304 trillion from SCB.

Additionally, she faces charges of obstructing government inspections by allegedly offering bribes totaling $5.2 million to Do Thi Nhan, who previously led the Department of Inspection and Supervision at the State Bank.

According to police reports, from the end of 2011, Lan began using other individuals’ names to acquire majority ownership in the joint-stock commercial banks Saigon Commercial JSC, Vietnam Tin Nghia, and De Nhat. Investigation findings indicated that Lan’s family members occupied senior positions at these banks, which essentially functioned in her interest.

On January 1, 2012, Lan orchestrated the merger of these three banks into SCB. From that point, SCB effectively operated as a financial arm for Lan, channeling funds into Van Thinh Phat’s activities. While Lan did not hold a direct executive role in the bank, she controlled a significant 91.5% of SCB’s shares.