A multi-billion-dollar fraud scandal involving one of Vietnam’s most prominent tycoons exposed systemic weaknesses in the country’s banking sector, say analysts who warn other such cases could yet emerge. Judges on Tuesday upheld the death sentence of property developer Truong My Lan, who was convicted this year of embezzling vast sums from the Saigon Commercial Bank (SCB), which she controlled, having borrowed from tens of thousands of small investors.Corruption is extensive in Vietnam, which ranked 83rd out of 180 in Transparency International’s most recent Corruption Perception Index.But the monumental scale of Lan’s crime was unprecedented, with the $27 billion in losses prosecutors said she caused equivalent to Bosnia’s entire annual gross domestic product.Banking experts fear other damaging allegations are lurking in hidden recesses of the financial sector of the fast-growing economy, which is seen as a favoured destination for foreign investors looking for an alternative to China.”SCB is not a single problem, it is an illness of the whole economy,” banking expert Bui Kien Thanh told AFP.The Vietnamese financial system was “characterised by a lack of tight state management”, he said.”Similar issues are rampant in society, so (Vietnam) needs to study and fix the problem before others arise.”Experts say a key systemic weakness is in the regulation of the corporate bond market, where companies borrow money from investors.- Contemplating suicide -In most developed markets, bonds are issued through independently regulated brokers on the basis of a full prospectus, graded by ratings agencies, and traded on stock exchanges.But SCB, through its branches, misleadingly sold its bonds directly to retail customers, with staff trained for weeks on how to falsely reassure them their money was secure and the investment carried little risk.Tens of thousands of people invested their savings in the bonds and lost everything when the bank collapsed and had to be bailed out by authorities, some of them contemplating suicide.Most Vietnamese company debt is not rated for creditworthiness at all, with local ratings agency FiinRatings saying there were no corporate bonds with credit ratings in the country in the years before Lan’s arrest.That compared with an average of around 50 percent across the 10-member Association of South East Asian Nations (ASEAN).According to state media, a judge at Lan’s original trial asked police to look into the role played by staff at three of the world’s biggest accounting firms that audited SCB’s books — Ernst & Young, Deloitte and KPMG.None of the three responded to requests for comment by AFP.At every level of the Vietnamese financial sector — from employees on the ground to regulatory authorities — there is a lack of training on financial markets, the risks involved and regulatory obligations, Thanh said.On paper, Lan owned just five percent of shares in SCB, but at her trial, the court concluded that she effectively controlled more than 90 percent through family, friends and staff who were asked to hold stocks on her behalf. – ‘Can of worms’ -She then used her position to direct SCB management staff to withdraw money from the bank, over time transporting the equivalent of $4.4 billion in cash in trucks to her home and the offices of her Van Thinh Phat property firm.”They don’t question the paperwork… they just say, how are we going to do it? How fast can we do it?” said Khuong Huu Loc, an economist based in the United States. “The whole system is a game based on collusion,” he added. “The problem is, it gets so bad, (but) people let her continue on because you don’t want to open the can of worms.”That comes on top of the corruption that is deeply embedded in the system — one former chief inspector at the State Bank of Vietnam (SBV) was found guilty of accepting a $5 million bribe to overlook financial problems at SCB.Since the scandal emerged, Vietnam has stepped up an anti-corruption drive.But Carl Thayer, an emeritus professor at The University of New South Wales, warned foreign investors were concerned anti-graft efforts had “led to a chilling effect on the state bureaucracy and a slowing of procedures”, with officials fearing taking any decision could lead to their motives being questioned.Even so, he said the revelations from the case meant Vietnam “will have to take exceptional steps to audit the banking system effectively”.Even if there was nothing on the gargantuan scale of SCB waiting to be found, Loc said that “there could be a smaller version out there”.”The question is how many?”

In Vietnam’s heavily polluted capital Hanoi, teenage taxi driver Phung Khac Trung rides his electric motorbike through streets jammed with two-wheelers belching toxic fumes.Trung, 19, is one of a growing number of Generation-Z workers driving an e-bike trend in the communist nation where 77 million — largely petrol — motorbikes rule the roads.A cheap set of electric wheels can now be had for as little as $500, but issues include wasting hours at charging stations and people finding it hard to give up their habits.Trung has long hated riding in Hanoi, rated among the world’s top 10 polluted capital cities in 2023 by air quality technology firm IQAir. The air “is unbearable for motorbike riders”, said Trung, who is working as a motorbike taxi driver before applying to university.”When stopping at T-junctions… my only wish is to run the red light. The smell of petrol is so bad,” he told AFP after a morning rush-hour shift in air labelled “unhealthy” by IQAir. More than two thirds of the poisonous smog that blankets Hanoi for much of the year is caused by petrol vehicles, city authorities said last year. The World Bank puts the figure at 30 percent. Vietnam officials have ordered that a quarter of two-wheelers across the country must be electric by 2030 to help battle the air crisis.In 2023 just nine percent of two wheelers sold were electric, according to the International Energy Agency — although only in China was the share higher.- Hard to give up -Low running costs and cheap prices are pulling in students, who account for 80 percent of electric two-wheeler users in Vietnam, transport analyst Truong Thi My Thanh said.But for older drivers, it is harder to give up what they know.Fruit vendor Tran Thi Hoa, 43, has been driving a petrol motorbike for more than two decades and has no intention of switching. “The gasoline motorbike is so convenient. It takes me just a few minutes to fuel up,” she said.”I know e-bikes are good for the environment and can help me save on petrol, but I am too used to what I have,” Hoa told AFP from behind her facemask.Although most electric two-wheelers can easily be charged at home, fears over battery safety cause many to instead use one of the 150,000 EV power points installed by Nasdaq-listed VinFast across the country.After a fire last year in Hanoi that killed 56 people, several apartment buildings temporarily restricted EV charging — before police later ruled out battery charging as a possible cause.But some remain fearful, while others living in crowded apartment shares have no space to power up.Trung, whose VinFast scooter has a 200-kilometre (124-mile) range, spends up to three hours a day drinking tea and scrolling on his phone while he waits for his battery to charge — time he could be picking up fares.But home-grown start-up Selex, which makes e-bikes and battery packs, has pioneered a quick-fix — stations where riders can instantly swap a depleted battery for a new one. – ‘Swapping is critical’ -Bowen Wang, senior sustainable transport specialist at the World Bank, told a news conference this month, that it was delivery and taxi firms, as well as rural drivers, who could really benefit.They “typically drive much longer distances than urban users”, he said. “That’s where the swapping is critical.”Selex, which is now backed by the Asian Development Bank, has partnerships with delivery giants Lazada Logistics and DHL Express, who use e-bikes for some of their shipments. Vingroup — helmed by Vietnam’s richest man — runs a taxi company with a fleet of thousands of e-bikes, mostly in major cities.Selex founder Nguyen Phuoc Huu Nguyen, who left his job on a top-secret defence ministry research project to set up the company, urged the government to help drive momentum through incentives. He suggested that a vehicle registration fee waiver for EVs would help “end-users see the benefits of buying an e-bike”.”We all understand that EVs are good for the environment. But it needs investment.”Transport analyst Thanh emphasises that Hanoi must also embrace public transport alongside EVs if it wants to free up gridlocked streets. But if a shift to electric cannot fully solve Hanoi’s issues, the growth in ownership “is a beacon of hope”, Thanh told AFP.

South Korean stocks sank more than two percent Wednesday while the won rebounded from earlier losses after President Yoon Suk Yeol dramatically declared martial law overnight before reversing the decision hours later.The shock announcement sent shivers through the trading floor in Seoul and fuelled a political crisis in Asia’s third-biggest economy, with the already unpopular Yoon facing a possible impeachment.Investors are now keeping a close eye on developments in the country, with analysts pointing out that the upheaval comes as authorities steeled for the second presidency of Donald Trump, who has vowed to reignite his hardball trade policy.The Kospi index shed as much as 2.3 percent at the open as traders fretted over the impact of the events overnight, when Yoon declared South Korea’s first martial law in more than four decades, catching its global allies off guard.He said the decision was made “to safeguard a liberal South Korea from the threats posed by North Korea’s communist forces and to eliminate anti-state elements plundering people’s freedom and happiness”.However, he backed down hours later when lawmakers voted to oppose the declaration, while thousands of protesters took to the streets and the nation’s largest umbrella labour union called an “indefinite general strike” until Yoon resigned.The won tumbled more than three percent to a two-year low of 1,444 per dollar after the declaration, then bounced back to around 1,415 following the U-turn.The South Korean finance ministry looked to provide stability, saying it would deploy “unlimited liquidity” into the country’s financial markets if necessary.Michael Wan at MUFG warned that the country could face turmoil.”While the worst negative economic impact to South Korea including on tourism and domestic activity, may have been averted in the near-term, political uncertainty could still remain,” he said in a commentary. “From a macro perspective, South Korea was already one of the more vulnerable countries to the impact of Trump’s proposed tariffs, and this recent development could raise some further risk premium on the currency at least until we get clarity on political stability.”The losses in Seoul came as most other markets in Asia struggled, with Tokyo, Hong Kong, Sydney and Wellington down. Singapore, Taipei and Manila rose.Wall Street had provided a healthy lead, with the S&P 500 and Nasdaq hitting fresh records as investors try to assess the chances of the Federal Reserve slashing interest rates again this month.Meanwhile, Germany’s DAX ended above 20,000 for the first time.Even Paris eked out gains despite the brewing political crisis in France, where opposition lawmakers vowed to topple the three-month-old minority government of Prime Minister Michel Barnier in a no-confidence vote owing to a budget standoff.The euro remained wedged around a 14-month low of $1.0500 on concerns about the outlook for the eurozone’s number two economy.Oil prices were barely moved after surging around 2.5 percent Tuesday on reports that major producers at the OPEC+ grouping were close to a deal to extend output limits.- Key figures around 0230 GMT -Seoul – Kospi Index: DOWN 2.0 percent at 2,450.89Tokyo – Nikkei 225: DOWN 0.4 percent at 39,077.04 (break)Hong Kong – Hang Seng Index: DOWN 0.3 percent at 19,687.75Shanghai – Composite: DOWN 0.2 percent at 3,372.50Euro/dollar: DOWN at $1.0504 from $1.0511 on TuesdayPound/dollar: DOWN at $1.2668 from $1.2673Dollar/yen: UP at 149.91 yen from 149.53 yen Euro/pound: DOWN at 82.92 from 82.94 penceWest Texas Intermediate: FLAT at $69.96 per barrelBrent North Sea Crude: FLAT at $73.64 per barrelNew York – Dow: DOWN 0.2 percent at 44,705.53 (close)London – FTSE 100: UP 0.6 percent at 8,359.41 (close)