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Vietnam under pressure from international anti-corruption laws to act

Thomson Reuters Accelus - Thu, 15 Sep 2011 16:30 GMT
Author: Thomson Reuters Accelus
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The extra-territorial reach of foreign anti-corruption legislation and the increasingly large number of foreign companies involved in bribing Vietnamese government officials are starting to have an impact in the country. Industry experts have noted, however, that corruption in Vietnam's private sector has remained largely unacknowledged, with very few prosecutions having been carried out so far. The reason, they said, was that Vietnamese law did not consider corruption involving corporates to be crime. According to Luu Hoang Ha, solicitor at LDV Lawyers in Ho Chi Minh City, the focus of the Vietnamese government has always been to protect the state rather than private ownership. Such an approach comes out very strongly in the "National Anti-Corruption Strategy Towards 2020" which signals the state's intention to eradicate corruption in the country, starting with making it a criminal offence to bribe government officials. Indeed, two recently released circulars require government officials to declare their assets and those of their close relatives. Ha told Thomson Reuters: "The new law now requires government officials to make known their assets to the people they work with. Such declarations are still not open to the public but it is considered a big move for Vietnam." While the latest moves are to be applauded, industry experts have warned that, at some point, the widespread discontent over the government's failure to outlaw corruption in the private sector would need to be voiced. Until now, there has only been one private sector initiative, the Integrity and Transparency in Business Initiative, led by the Vietnam Chamber of Commerce and Industry. Corruption in private sector not acknowledged Ha pointed out that Vietnam's existing regulatory framework did provide for criminal liability in cases of bribery involving government officials. The law is targeted at public officials and managers of state-owned enterprises who receive bribes, and sets out penalties which can amount to imprisonment of between two and seven years for those receiving bribes of up to VND 2 million, and life imprisonment or death sentence for those who receive bribes of up to VND 300 million. Lawyers noted, however, that the law did not provide for private companies to prosecute their employees if the latter had been found to be paying bribes to another private company or to have received bribes from other companies. Ha added: "Private companies cannot prosecute corruption in the criminal court. Persons guilty of paying or receiving bribes will at most be subject to corporate policy and procedures or employee discipline." It is hardly surprising, therefore, that Vietnam did poorly on many transparency indicators in 2010; much worse than it had done in 2009. Vietnamese and international firms cited business entry costs and transparency as most some of the problematic issues. International pressures Industry experts have suggested that recent cases involving international firms paying bribes to Vietnamese officials, together with tougher laws emanating from overseas enforcement agencies, are beginning to put more pressure on Vietnam. The UK Bribery Act 2010, which came into force on July 1, and the whistle-blowing provision under the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act, have been particularly noteworthy for the aggressive approaches they have respectively taken towards corruption and financial crime. In a paper which Ha and Ben Giaretta of Ashurst wrote jointly on the implications of the UK Bribery Act for UK firms operating out of Vietnam, the authors noted an increasing trend towards a tough approach to corruption issues in Vietnam. "This is driven by domestic concerns and increasing international pressures. It is also in line with both regional and global developments, evidenced by the ever-growing number of countries criminalising foreign bribery. Finally, it will also develop in part through joint Vietnamese and foreign (primarily U.S. and UK) anti-corruption activities," they said. The most recent case on the payment of bribes to Vietnamese officials involved Australia's Securency, which was alleged to have paid commissions to officials in Vietnam in 2002 to secure a contract for printing Vietnamese currency. It was also alleged that Securency had hired as its agent a Vietnamese company which employed the son of the governor of the State Bank of Vietnam. Lawyers in Vietnam told Thomson Reuters, however, that the case had yet to be formally recognised by the Vietnamese government. Exceptions One of the challenges posed by Vietnam's current legislation is that it does not recognise evidence from overseas, in part because the law remains under-developed and also because of the cautious stance which the government has taken towards overseas evidence. Lawyers said despite the fact that Vietnam had signed up to the United Nations Convention Against Corruption (UNCAC), the Vietnamese government had chosen to make a few exceptions. They included not criminalising corruption in the private sector, not criminalising illicit enrichment, not recognising evidence from overseas, and extradition under Vietnam laws. Lawyers told Thomson Reuters that cases which had been successfully prosecuted had often relied on evidence drawn from book and recordkeeping rather than on hard evidence. Japan's Pacific Consultants International Company (PCI), which was found to have paid bribes to a senior Vietnamese government official in connection with Official Development Assistance (ODA) projects, was one of the few cases successfully prosecuted in Vietnam, based on evidence presented abroad. The case not only caused public outcry in Japan but also received widespread attention in Vietnam. "Vietnam's prosecution against the PCI case interpreted the law in such a way that it supported the recognition of evidence from Japan. The court verdict also showed the inability of the Vietnamese official to answer a lot of questions," said a lawyer who asked not to be named. While it remains to be seen how the UK Bribery Act will affect Vietnam, lawyers said the extra-territorial effect of the Act had led to greater awareness of corruption in the private sector. "People thinking of paying or receiving bribes would have to use more sophisticated methods because of the extra-territorial effects of foreign laws," the lawyer added. Now that the UK Bribery Act has been implemented, Ha said foreign embassies and diplomats operating in Vietnam might begin to put more pressure on the Vietnamese government as they sought to level the playing field, to allow multinational corporations in Vietnam carry out businesses in a fair and transparent manner. (VDN1 = US$0.00005)

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