Vietnam has arrested a top banking mogul on suspicion of undisclosed financial crimes, the government said Tuesday, putting a spotlight on the country’s beleaguered banking sector, state-linked corruption, and the need for reforms.
Nguyen Duc Kien, 48, a key shareholder in some of Vietnam’s largest financial institutions, was taken into custody Monday afternoon in Hanoi after police raided his home and seized documents.
The multimillionaire cofounder of one of the largest banks in Vietnam, the Asian Commercial Bank (ACB), was arrested for “illegal business activities” in connection with three private companies he chaired, the Ministry of Public Security said Tuesday.
Vietnam’s weak banking sector is poorly regulated and laden with bad debt stemming from years of high inflation and plunging asset prices.
Le Dang Doanh, one of Vietnam’s leading economists and former adviser to the prime minister, said Kiem’s arrest, which comes as the ruling Communist Party of Vietnam broadens an anti-corruption drive launched last month, was an important sign of better rule of law in the country.
"The arrest is a good signal for the implementation of laws in Vietnam. It is a strong sign that [even] such rich people in Vietnam cannot evade legal punishment if they commit a crime," he told RFA’s Vietnamese service.
But he said the case also exposes further necessity for reforms.
"The conclusion to this case is not [just] a sentence for Kien, but [the conclusion to be drawn from the case is] that it is important for reform to be undertaken in a serious way."
Ironically, Kien was reportedly involved in drafting the country's new bank reforms.
He is said to hold shares in ACB, Sacombank, Eximbank, VietBank, according to Agence France-Presse.
ACB, which counts global banking giant Standard Chartered as one of its “strategic partners,” issued a statement on Tuesday asserting Kien’s arrest would not impact its performance, saying the businessman’s arrest was a “personal issue” and that he was no longer a major shareholder in the bank.
"The detention of Kien is the decision of the authorities so it does not affect the normal operation of the bank," ACB Deputy General Director Nguyen Thanh Toai said.
But news of the arrest triggered the largest stock market drop in almost four years, according to Bloomberg News, with ACB's share price plunging seven percent by the close of the Hanoi Stock Exchange on Tuesday.
Nguyen Van Binh, the head of Vietnam’s central bank, said that he was aware of the risk of fallout from Kien's arrest and that the State Bank of Vietnam was ready to intervene to check any market chaos.
Kien is also well known in Vietnam’s soccer world as the chairman of Hanoi Football Club and was among the founding members of the Vietnam Professional Football Jointstock Company that runs the popular V-League soccer association.
Analysts say his arrest may signal infighting between factions linked to the prime minister, with whom Kiem is seen as being aligned, and the president.
Some of the political elite may be concerned that the prime minister has amassed too much power "and needs to be pulled back in a peg," Carl Thayer, a Vietnam scholar at the University of New South Wales in Australia, told Agence France-Presse.
"The atmosphere for some reason is just right for going after big fish,” he said.
Reported by RFA’s Nam Nguyen for RFA’s Vietnamese service. Translated by An Nguyen. Written in English by Rachel Vandenbrink.