Vietnam Officials on Trial for Corruption on ADB Project

by Vu Kim Chung

14-9-2001

Eight people went on trial in Vietnam over a high-profile corruption scandal that led to the disgrace of a deputy prime minister. Six of the defendants are top government officials, who are accused of aiding and abetting the corrupt economic mismanagement of the Asian Development Bank-financed Irrigation and Flood Protection Rehabilitation Project and of corrupt land dealings of a private businessman.

The case, which sparked widespread public anger, also involved the illegal reselling of land earmarked for an amusement park in Hanoi.

In November 1999, the then Deputy Prime Minister, Ngo Xuan Loc, was dismissed for his part in the scandal, but just five months later he was appointed special advisor to the government with responsibility for the property sector.

The National Assembly's special committee on corruption considered the responsibility of some officials directly under the Party Central Committee's management who had been involved in the major legal cases. The committee decided to serve warnings to Cao Si Kiem, CPV CC member, former governor of the State Bank of Viet Nam, and Deputy Director of the CPV CC's Commission for Economic Affairs, and Ngo Xuan Loc, CPV CC member and Deputy Prime Minister.

The committee also proposed that the National Assembly relieve Loc from his post as Deputy PM for his transgressions and venal behaviour related to the Asian Development Bank-financed Irrigation and Flood Protection Rehabilitation Project and having accepted bribes from the prime international consultant attached to the project in consideration of selection. Poor management and irregular practices by the Central Project Office of the Ministry of Agriculture and Rural Development and associated sub-project offices in the respective provinces has resulted in substandard quality in the construction work on the Hanoi Dykes, problems with relief wells for the dykes, poor construction in the rehabilitation of the North Nghe An and Song Chu irrigation schemes, and improper construction of the rehabilitated Bai Thuong Dam by forcing the Chinese contractor to construct the dam with lean concrete instead of roller compacted concrete as specified by the American design consultantant on the project. The project has caused massive losses to the contractor because of poor project management of the CPO, insisting on complicated and in some cases illegal bureaucratic procedures, and conflict of interest by insisting in the hiring of its own construction companies and offices as subcontractors to the prime contractor for the reconstruction of the dam.

Dao Duy Quat, deputy head of the party's Ideological and Cultural Commission, earlier said Loc furthermore was singled out because of unidentified problems with the Thanh Long water park project in Hanoi, which was plagued by irregularities. Construction and industry falls under Loc's responsibilities as deputy prime minister and it was in this office that the problems with the Bai Thuong Dam project arose.

Former Deputy PM: Ngo Xuan Loc

Vietnamese prosecutors prepared the cases against the officials involved in an unfinished water resources development project that lead to the sacking of Deputy Prime Minister Ngo Xuan Loc. The ruling Communist Party accused Loc of mismanagement over the project and had him dismissed by the National Assembly during the legislative organ's session in November 1999. They gave no further comment, but the party daily Nhan Dan (People) said the four had been charged with negligence for allowing the Hanoi-based project to proceed after it was obvious bribes were paid as consideraiton to win the project by the lead international consultant. The project, which encompassed rehabilitation of the Hanoi Dykes, the North Nghe An Irrigation Ystsem and Song Chu Irrigation System and the Bai Thuong Dam in Thanh Hoa, had been plagued by allegations of graft, illegal land transfers and illegal sub-contracting of government organizations for goods and services delivered to the project, inflated charges for these goods and services to the prime international consultants and contractors that carried out construction.

Official media said Loc, who had responsibility for industry and construction, signed off on the project after an earlier submission to go ahead with that particular lead consultant had been rejected by the government. The party did not directly accuse Loc of graft or said he would be charged. The former deputy prime minister has not ever made comments about the case.

Reports identified two of the senior officials who were charged as Bui Tuong Lam and Nguyen Quang Linh, head and deputy head of the HDPI. A third official was charged in June 1999 and the CPO Director Le Van Hien was relieved of his duties effective June 1, 1999 as a result of the investigations and replaced by Nguyen Dinh Hiep.

"We've all heard stories of endemic corruption in Vietnam, but this deception was so blatant it meant the senior party leadership could not just close ranks, they had to act," said one foreign diplomat.

Analysts said the action against Loc was intended to mollify a populace cynical about attempts to stamp out widespread official corruption and boost confidence in the state apparatus.

Loc also had to be accountable for problems within the cement industry when he was construction minister in the mid-90s, said Quat, briefing correspondents about the week-long plenum at a news conference before the VTV bulletin.

He said the elite politburo would also discipline former customs director Dinh, who was replaced in October 1999, over problems during his tenure. Dinh's department was heavily criticised because of numerous smuggling cases involving senior customs officials. Foreign investors also list graft at customs points as one of the top headaches in doing business in Vietnam. The Chinese contractor for the Bai Thuong Dam project reported on many occasions it was unable to import necessary equipment from China to carry out the construction work. The bureaucratic delays could only be surmounted with massive bribes which, in addition to the other bureaucratic problems associated with the project, resulted in the work being nearly 70 percent more than they had bid for--all for bribes and bureaucratic problems associated with the implementation of construction.

The delays in importing the equipment , together with the other bureaucratic irregularities, caused the dam construction schedule to slide, despite frantic attempts by the Canadian engineering subconsultant from Vancouver to remedy the situation. His efforts to assist in resolving the problems in management and getting the work back on schedule, however, resulted in the CPO, after closed-door discussions with the lead international consultant, to which the subconsultants were not privy, and embarrassed by the irregularities that the subconsultant had unwittingly uncovered, to deny him to stay in the country and therefore continue with his valiant attempts to improve the situation at the project, said Quat. The majority of the work was completed only in September 1999 instead of August 1998, as had been planned. Work still continued on the Bai Thuong Dam and Hanoi Dykes as late as 2001.

The communist authorities in Vietnam admit that corruption has become a widespread problem in the party.

National Assembly's Investigation of Vietnam's Irrigation and Flood Protection Project Completed