Academic journal article Washington International Law Journal

Bank Privatization in Vietnam: Examining Changes to Management in Vietnam's New Banking Law, Decree No. 59/2009/nd-Cp

Academic journal article Washington International Law Journal

Bank Privatization in Vietnam: Examining Changes to Management in Vietnam's New Banking Law, Decree No. 59/2009/nd-Cp

Article excerpt

I. INTRODUCTION

In May of 2002, Kim Brix Andersen, a Danish national, left his job as a vice-president at the largest bank in Singapore to help manage the foreign funds of a quarry project in Vietnam.1 The quarry project was established by two British nationals, Peter Laking and Sean McCormack.2 In mid-2002, two Irish investors suspected Laking and McCormack of selling their shares in the project without their knowledge. The two Irishmen lodged a civil claim against Laking and McCormack in the High Court of London and a complaint against them with the Vietnamese public security ministry in Vietnam.3 Although the case was dropped in the British High Courts for lack of evidence, the Vietnamese government continued to investigate the case for three months.4 Laking and McCormack fled Vietnam in May 2003 after supposedly experiencing harassment from employees of the Irish investors and the Vietnamese government.5 When Laking returned in May 2004, he was arrested in Ho Chi Minh City.6 He joined Andersen and Tom Hong, an American investor associated with the company, in prison. Andersen was alleged to have helped the two embezzle $6.5 million USD since the time he was put in charge of foreign funds. 7 Vietnamese newspapers alleged that the project for which they worked was a multimillion dollar scam, set up as a false company used to swindle money from foreign investors.8 Andersen, after intervention by the Danish ambassador, was released in January 2005 due to lack of evidence against him, after 15 months of being incarcerated.9 Laking has been out on bail since July 31, 2007.10 According to Fair Trials International, Laking is still awaiting trial while prosecutors attempt to build a case.11

As Vietnam attempts to enter the world market, it must strike a balance between welcoming foreign investment and management, while still maintaining control over the internal workings of the banks.12 As seen in the Andersen case,13 investment opportunities are luring high-ranking managers to the country. The case also shows that in attempts to control these managers, the Vietnamese government is willing to go to extreme lengths to investigate a case against them, even if this means depriving an individual of his or her position in a company and/or procedural rights. This situation becomes more complicated as more industries begin to welcome foreign investment. Due to obligations under the World Trade Organization, Vietnam must "equitize" its banks in order to prepare the nation for the influx of foreign capital.14 Equitization, or the process of selling off shares in state-owned enterprises, proposes to modernize Vietnamese state-owned banks.15 Equitization also proposes the introduction of a cadre of forward thinking and entrepreneurial managers.16 In addressing this issue, and the general inadequacy of the old banking law to deal with the newly equitized banks, in September 2009, the State Bank of Vietnam released Decree 59/2009/ND-CP, ("New Banking Law").17 This comment argues that the New Banking Law takes a heavy-handed approach in controlling the influx of new managers by creating stricter regulations for management and more opportunity for the government to remove managers arbitrarily.

Vietnam's New Banking Law increases the government's authority to intervene and remove managers from their positions because it heightens qualification requirements for managers, creates more situations in which managers can be removed on the basis of past activities, and enhances reliance on the problematic Penal Code and Criminal Procedure Code. This comment will demonstrate how the New Banking Law contains stricter regulation on the qualifications of managers compared to the other two laws regulating Vietnamese banks: Law No. 60/2005/QH11 ("Enterprise Law")18 and Law No. 02/1997/QH10 ("Law on Credit Institutions").19 Moreover, as can be seen in the Andersen case, even if the stricter qualifications and extended prohibitions against managers are remedied, problems with the Penal Code and Criminal Procedure create significant problems with due process, making it easy for the state to remove managers from their position. …

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