Vietnam is deemed one of the more corrupt countries in the world, ranking 120 out of 180 countries on Transparency International's 2009 index.
Although not much has been done about this to date, the Vietnamese government has recently started to look at anti-bribery and corruption measures in more detail.
In April, the Vietnamese Prime Minister, Nguyen Tan Dung approved a plan to implement the United Nations Convention Against Corruption (“UNCAC”), which was ratified in June 2009.
It remains to be seen whether this will lead to further measures and an increase in enforcement activity.
Although Vietnamese authorities have been reticent to prosecute, there has been recent activity by foreign prosecutors (the US and Japan) connected with Vietnam. These case show the risks associated with doing business in Vietnam.
Nexus Technologies Inc.
On 16 March 2010, Nexus Technologies, Inc. (“Nexus”), a privately-owned export company based in Philadelphia, pleaded guilty to FCPArelated violations. Nexus’ president and owner, Nam Nguyen and two of his siblings, Kim Nguyen and An Nguyen (the “Nguyens”), all U.S. citizens of Vietnamese descent, have also pleaded guilty to violations of the anti-bribery provisions of the FCPA and other violations, including money laundering and conspiracy. An associate of Nexus, Joseph T. Lukas (“Lukas”), earlier pleaded guilty to related charges on 29 June 2009.
In September 2008, U.S. federal prosecutors filed an indictment charging Nexus, the Nguyens and Lukas with conspiracy and violations of the FCPA. The indictment alleged that between 1999 and 2008 the defendants had engaged in a conspiracy to pay bribes to Vietnamese government officials in order to obtain contracts for Nexus. Pursuant to these contracts, Nexus purchased helicopter parts, containment equipment, chemical detectors, satellite communication parts, and air tracking systems from U.S. vendors and exported these items to customers in Vietnam, which included various Vietnamese government agencies, such as the procurement arm of the Vietnamese Army, Ministry of Transport, Ministry of Industry, and Ministry of Public Security.
On 29 October 2009, a superseding indictment was entered against Nexus and the Nguyens adding violations of conspiracy to violate the Travel Act and money laundering, substantive violations of the Travel Act, substantive counts of money laundering, and additional violations of the FCPA.
In connection with these activities, the Nguyens, Nexus and Lukas admitted that from 1999 to 2008, they agreed to pay and knowingly paid more than US$250,000 in bribes to Vietnamese government officials in exchange for contracts with agencies for which the officials worked. In addition, the defendants admitted that the bribes were disguised as commissions in the corporate records. Nexus faces a fine of up to USD$27 million. Nam Nguyen and An Nguyen each face up to 35 years in prison while Kim Nguyen faces up to 30 years in prison and Lukas faces up to 10 years in prison. Sentencing for each defendant is scheduled for 21 July 2010.
On 22 March 2010, the U.S. Department of Justice filed a criminal information against Daimler AG (“Daimler”), a German car manufacturer which is listed on the New York Stock Exchange, alleging multiple FCPA violations involving at least 22 countries, including Vietnam. On 1 April 2010, a federal judge approved a US$185 million settlement in which Daimler will pay US$93.6 in criminal fines and US$91.4 in civil fines. The case, which arose out of claims by a former employee, involved several predicate acts in Vietnam, including the following.
In 2004, Mercedes Benz Vietnam (“MBV”), majority owned and controlled by Daimler, allegedly entered into a (approximately) US$14,653,000 contract with Saigon Passenger Transport Company (“Saigon Bus”) for the sale of 200 buses. To obtain the contract, MBV allegedly agreed to pay a commission of US$1,447,690 to a Vietnamese government official associated with Saigon Bus. Representatives of MBV and Saigon Bus allegedly created a sham consulting agreement to facilitate the payment of the commission. One payment of US$55,343.64 was allegedly made.
In October 2004, during the Asia Europe Meeting (“ASEM 5”) in Hanoi, MBV allegedly agreed to lend the Vietnamese government 78 Mercedes Benz cars during an international conference in exchange for permission to import and sell 78 completely assembled cars at a reduced tariff rate of 25% instead of the standard 100% tariff rate. In addition, MBV allegedly improperly paid US$400,000 to government officials and recorded these payments in its corporate books as payments for an emissions consulting agreement.
In addition, between 2003 and 2005, MBV allegedly entered into three contracts with the Vietnamese Ministry of Public Security of Vietnam for the sale of Mercedes Benz vehicles. Senior management of MBV allegedly approved three improper payments to Vietnamese government officials to secure these contracts.
Pacific Consultants International
In November 2008, former officials of Japanese company Pacific Consultants International (“PCI”) pleaded guilty to violations of Japan’s Unfair Competition Prevention Law. In connection with the guilty pleas, the defendants admitted to paying USD$820,000 in bribes to senior Vietnamese government officials to secure consulting contracts in connection with Japanese ODA-funded road projects.
In September 2009, Mr Huynh Ngoc Sy, former deputy director of Ho Chi Minh City Department of Transport and Mr Le Qua, former deputy head of East West, were charged with “abuse of power” for illegally leasing a state-owned property to PCI. The Vietnamese Court sentenced Mr Sy to six years of imprisonment and Mr Qua to five years of imprisonment.
In January 2010, Mr Sy was charged with receiving USD$262,000 in bribes from PCI in exchange for awarding consulting contracts for road projects to PCI. The authorities are currently conducting investigations in connection with this charge.
Japan is historically one of Vietnam’s largest ODA donors. Prompted in part by the PCI corruption scandal, on 4 December 2008, Japanese Ambassador to Vietnam, Mitsuo Sakaba, announced that Japan was suspending USD$690 million in ODA until Vietnam took “meaningful” steps to eliminate corruption and avoid future abuses. Japan resumed ODA to Vietnam in March 2009.