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FCPA Blog Daily News

« Protecting The Privilege | Main | Settlement In ITT China Payments Case »
Sunday
Feb152009

Vietnam In The News

Last month we reported the conviction in a Tokyo court of three Japanes executives and their company on charges of bribing a senior Vietnamese government official. The illegal payments of $820,000 were intended to secure contracts for road projects backed by Japanese aid money. In court, the recipient of the bribes was identified as Huynh Ngoc Sy, an official in Ho Chi Minh City.

Last week, the Vietnam News Agency reported the arrest of the same Mr. Sy, 56, for "abuse of power." He was the former deputy director of Ho Chi Minh City’s Department of Transport, and the former director of the East-West Highway and City Water Environment Improvement projects. After his arrest, investigators from the Ministry of Public Security’s Anti-corruption Department searched his house. Police also arrested Sy’s deputy, Le Qua, and searched his house.

In November last year, Sy was suspended from his job and banned from traveling outside Vietnam. That action came after the country's Prime Minister, Nguyen Tan Dung, directed his government to "co-operate with Japanese agencies investigating allegations that officials of a Japanese firm had bribed Vietnamese officials to get project contracts."

Vietnam's biggest aid provider is Japan. But the bribery scandal caused such a flap in Japan that it suspended aid, including low-interest loans for infrastructure projects. Vietnam's state television reported last week that following Sy's arrest, Vietnam's prime minister asked Japan to resume the loan program.

Japan has a low incidence of domestic public corruption -- it ranked 18th on the 2008 Corruption Perception Index, tied with Belgium and the United States. But until this case, it hadn't prosecuted any overseas bribery cases. In June 2008, the OECD criticized Japan for its "lagging" enforcement. We speculated that this case went to court only because it involved the misuse of Japanese taxpayer funds in the foreign aid program.

Vietnam is ranked 121st on the 2008 Corruption Perception Index, tied with Nepal, Nigeria, Sao Tome and Principe, and Togo. Despite Vietnam's corruption-prone reputation, it wasn't named in any Foreign Corrupt Practices Act enforcement actions until recently. In September 2008, U.S. citizens Nam Nguyen, Joseph Lukas, Kim Nguyen, and An Nguyen, along with their Philadelphia-based company, Nexus Technologies, were charged under the Foreign Corrupt Practices Act with bribing government officials in Vietnam. The alleged bribes were intended to secure contracts to supply high-tech items -- including third-party underwater mapping and bomb containment equipment, helicopter parts, chemical detectors, satellite communication parts and air tracking systems. Their trial is pending.

In December 2008, Siemens' guilty plea to FCPA books and records violations involved Vietnam. The Securities and Exchange Commission's complaint (download the pdf here) said Siemens' medical division "paid $183,000 in early 2005 and $200,000 in early 2006 in connection with the sale of approximately $6 million of medical devices on two projects involving the Vietnamese Ministry of Health." And in 2002, the complaint said, Siemens' communications division paid about $140,000 in bribes as "part of a much larger bribery scheme concocted by high-level managers at Siemens regional company in Vietnam, SLV, to pay bribes to government officials at Vietel and the Vietnamese Ministry of Defense in order to acquire Phase I of the Vietel GSM tender."
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