Some of Vietnam’s newly minted tycoons are falling victim to a power struggle with ideological tinges within the ruling Communist party.
In recent weeks, some of the country’s most prominent and successful businessmen have been rounded up by police, and now face various charges of corruption or illegal business activities.
Among the targets so far have been the billionaire founder Asia Commercial Bank (ACB), Nguyen Duc Kien, arrested in August on allegations of “improper lending.” And last week, three executives of the bank – the chairman and two deputies – resigned as the probe continues.
Also arrested was the head of the debt-laden state-owned Vietnam National Shipping Lines, Duong Chi Dung, who is suspected of corruption.
Dung was extradited from a neighbouring country early this month after he fled Vietnam in March when police began examining the company’s books.
It Vietnam, however, it is widely believed these men, whose success has depended on strong links to senior members of the Communist party, are surrogates for their mentors and collateral damage in a struggle going on behind the scenes.
This speculation has been fed particularly by the arrest of the ACB’s Kien, who left the bank’s board in 2010.
Kien has close ties to Prime Minister Nguyen Tan Dung, who is in the midst of power struggle with President Troung Tan Sang.
At issue is how, after decades of high growth and being a favoured target for foreign investment, the country should deal with its gathering woes of high inflation, endemic corruption, and a terminally unproductive state-owned sector.
Vietnam’s banks are a particular problem.
Banks are carrying a higher percentage of non-performing loans than any other of the 10 countries in Southeast Asia. Dud loans have nearly doubled this year and amount to about 10 per cent of total lending.
Prime Minister Dung is all for forging ahead. He wants to adopt the model pursued by the other Asian Tigers such as Japan, South Korea and Taiwan, and encourage the growth of privately owned industrial conglomerates.
To that end, the government has announced it will restructure some of the largest and most unproductive state-owned corporations. It is also planning to open its markets to more foreign-owned securities companies as part of a broader plan to encourage foreign investment.
But President Sang is more concerned about the survival in power of the Communist party and maintaining social stability.
He worries that Dung’s apparently feckless attitude and undisciplined pursuit of growth could fatally damage the reputation of the party in the eyes of the increasingly angry Vietnamese people.
Public discontent over inflation, disparity between rich and poor, and declining living standards could lead to the over-throw of the one-party state, Sang believes.
There is plenty of evidence of dissatisfaction with the government among the country’s 90 million people, who regularly take to the streets to vent their anger at price rises and the daily grind of having to pay bribes to officials for even the most basic services.
President Sang believes an essential first step in dealing with Vietnam’s problems is a reaffirmation of ideological principles among members of the Vietnamese Communist party.
In his National Day speech at the end of August, Sang called for solidarity among party members, which he said is essential to overcome “destabilizing elements.”
To that end a campaign of “criticism and self-criticism” has been going on for about two months.
Stalwarts of the Communist party around President Sang have for some time thought that a cause of Vietnam’s economic problems is a spate of duff investments, especially in attempts to modernize state-owned companies, which make up 40 per cent of the economy. Prime Minister Dung’s enthusiasm for economic growth, it is felt, far outweighs his investment acumen.
Dung only achieved reselection as prime minister in 2010 by presenting a self-criticism in which he admitted the mismanagement of state-owned companies, including shipbuilder Vinashin, which tottered on the edge of collapse with $4.5 billion of debt.
Nine executives of Vinashin were not so lucky. They received prison sentences of up to 20 years for mismanaging state resources.
These executives and the latest arrests are scapegoats for the government’s mismanagement.
The question now is whether the tussle between Dung and Sang will come to a show-down where one or the other is removed from power.
That could be hugely disruptive, just the sort of upheaval and demonstration to the public of disarray in the party that the Sang camp wants to avoid.
More likely is a compromise by which Dung’s vision of a modernized Vietnam is retained, but where the Sang camp has greater influence over the running of government and the party holds the prime minister more closely accountable for his actions.