Real estate tycoon's death sentence is a turning point in Vietnam's anti-corruption campaign

The unusually harsh death sentence given to a real estate tycoon in Vietnam was a pivotal moment in the decadelong “Blazing Furnace” anti-corruption campaign as the Vietnamese business community wrestled with an uncertain future Friday.

Real estate tycoon Truong My Lan, who was sentenced to death Thursday by a court in Ho Chi Minh city for orchestrating the country’s largest ever financial fraud case, was one of Vietnam's most important businesspeople for years. She has been convicted for fraud amounting to $12.5 billion — nearly 3% of the country’s 2022 GDP — and for illegally controlling a major bank and allowing loans that resulted in losses of $27 billion, state media outlets reported.

Vietnam typically gives death penalties crimes like terrorism or murder and, according to Amnesty International, has among the highest rates of capital punishment worldwide. But a death sentence for a financial crime is rare in the country.

Thursday's sentencing marked a “big turning point” in the ongoing anti-corruption drive in Vietnam, said Nguyen Khac Giang, an analyst at Singapore’s ISEAS-Yusof Ishak Institute.

“It signals that the party's commitment to a crackdown on corruption has … expanded," he said.

The Communist Party's so-called Blazing Furnace campaign began in 2013, but it wasn’t until 2018 that authorities began scanning the private sector. Since then, several owners of Vietnam's fast-growing businesses have been arrested. The trial for Trinh Van Quyet — the former chair of the real estate company FLC, which also owns Vietnam's third-largest airline, Bamboo Airways — will likely be heard next. He was arrested in 2022. Giang said Lan’s trial was “an example” for upcoming cases.

The anti-corruption campaign is a hallmark of Communist Party General Secretary Nguyen Phu Trong, Vietnam’s top politician. The 79-year-old ideologue views corruption as a grave threat facing the party and has vowed that the campaign will be a “blazing furnace” where no one is untouchable.

It's making foreign investors jittery while dampening Vietnam’s economic outlook at a time when the country has been positioning itself as the ideal home for businesses looking to shift their supply chains away from China. Vietnam already lost two presidents in a little over a year and the country’s bureaucracy has ground to a halt with terrified officials choosing to do nothing lest they be in the crosshairs.

Lan's death sentence sent “shockwaves” across the Vietnamese business community, creating a “sense of uncertainty” about the future, said Giang.

The real estate sector in particular is floundering. An estimated 1,300 property firms withdrew from the market in 2023 and high-rises lie empty in major cities like Hanoi and Ho Chi Minh. Add to this poor global demand and reduced public investment slowing Vietnam’s economic growth down to 5.05% last year, compared to 8.02% in 2022, according to government data.

Meanwhile, despite the long campaign against graft, public opinion about corruption in Vietnam remains mixed, according to an annual survey built on interviews with nearly 20,000 people known as the Vietnam Provincial Governance and Public Administration Performance Index. It found that, while fewer people were asked for bribes, the number of people who felt the government was serious about fighting corruption had actually dipped in 2023 from the previous year.

Giang said that these were now “uncharted waters” for Vietnam, making it impossible to predict what lay next.

"We haven’t really seen anything like this before,” he said.