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BANGKOK — A scandal engulfing Vietnam’s foreign ministry and a number of other public and private bodies are testing Hanoi’s reliability as a linchpin of an anticipated U.S.-led Asian economic framework and as a bulwark in the international fight to tame the COVID-19 pandemic.
Foreign Ministry, tourism, air, medical and manufacturing officials have been arrested and expelled from the ruling Communist Party in recent weeks. They are accused of pocketing $240 million by defrauding frightened Vietnamese citizens into paying inflated fees for government-arranged COVID-19 repatriation flights and cumbersome permits and of price-fixing emergency health care and equipment.
The scandal and the regime’s crackdown have given a black eye to a country that was setting itself up to be a model for clean government and economic efficiency and an alternative to China for international investors. It may also prove divisive at home.
The controversy has also called into question the effectiveness of Communist Party General Secretary Nguyen Phu Trong’s “Blazing Furnace” campaign against corruption, launched in 2016.
“The anti-corruption campaign is causing increasing uncertainty and anxiety among the [Vietnamese Communist Party] rank and file,” said Carlyle Thayer, professor emeritus at the Australian Defense Force Academy’s New South Wales University. “Steering committees for each of Vietnam’s 68 administrative units are expected to be more proactive in rooting out economic corruption.”
The controversy “raises the possibility of factional infighting at the national and local level,” Mr. Thayer said in an interview. He returned from Vietnam last month.
Vietnam is a charter member of the Biden administration’s U.S. Indo-Pacific Economic Framework, which President Biden launched in May to promote trade, investment, supply chain integration, good governance and deeper ties between the U.S. and more than a dozen Asian countries. The proposal was also widely seen as an alternative to China’s inroads in the region.
Many in Vietnam saw Hanoi’s participation as a tool to force through domestic reforms as well, but the scandal has disrupted those plans. Vietnam’s other international partners are also concerned.
“The scandals definitely affect Vietnam’s standing with governments, financial and development institutions, and the private sector,” said Bangkok-based Kasit Piromya, executive board member of ASEAN Parliamentarians for Human Rights. “It also undermines the standing of the [Communist Party of Vietnam].”
ASEAN is the regional bloc of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
“The U.S., and other investors and trading partners of Vietnam, must be more firm on governance [and] anti-corruption measures and the rule of law,” said Mr. Kasit, who was Thailand’s foreign minister from 2008 to 2011.
Mr. Biden launched the Indo-Pacific Economic Framework on May 23 at a gathering of representatives from Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam. Among the framework’s “key pillars,” the White House said, is the “criminalization of bribery in accordance with U.N. standards … to strengthen our efforts to crack down on corruption.”
Mr. Trong, 77, won reelection at the start of 2021 for a five-year term — his third — largely on the basis of a tough anti-corruption platform.
“This anti-corruption fight is still very hard,” Mr. Trong said at the time.
COVID-19 test controversy
When COVID-19 first swept Southeast Asia in 2020, Vietnam was praised for efficiently fighting the spread of the coronavirus with mass testing, strict lockdowns and expedited medical treatment. In 2021, however, Vietnam’s “demand for medical devices has been skyrocketing, giving rise to more corruption opportunities,” said Global Compliance News, a platform moderated by international law firm Baker McKenzie.
When the country’s COVID-19 cases rose from 1,500 in 2020 to 10 million during the first months of 2022, with 43,000 fatalities, testing kits suddenly became unusually expensive. The government’s “Blazing Furnace” crackdown eventually swept up more than 60 officials accused of price-fixing, including at the foreign and health ministries.
Officials were also arrested at the Ministry of Science and Technology, the Military Medical Academy, the state-owned Viet A Technologies, the Centers for Disease Control and Prevention in Hanoi, and local health departments.
Hanoi CDC Director Truong Quang Viet was arrested on June 10 on charges of “violating regulations on bidding, causing serious consequences” and inflating COVID-19 test kit prices, police told Vietnam’s Tuoi Tre News.
“Several officials — including high-ranking military generals, and directors of provincial branches of the [Hanoi] Center for Disease Control — have been arrested or placed under criminal investigation for their involvement in the case,” VnExpress reported.
Mr. Viet’s predecessor, Nguyen Nhat Cam, was imprisoned for 10 years in 2020 for similar corruption involving COVID-19 testing equipment, causing the government to lose $233,000.
Vice President Kamala Harris launched a U.S. CDC Southeast Asia regional office in Hanoi in August 2021, partly to work with Vietnam’s health agency. No public evidence or accusations of corruption have involved the U.S. regional office or American citizens.
Bribes reportedly led Vietnamese health officials to supply overpriced COVID-19 test kits to the Hanoi CDC and several hospitals.
In January, Phan Quoc Viet, general director of Viet A, which manufactured the swab kits, admitted to paying $35 million in bribe “bonuses” to health and hospital officials, VnExpress reported.
“In April 2020, the company was licensed by the Ministry of Health to distribute COVID-19 test kits,” Vietnam News reported. “Since then, it has supplied the test kits to [Vietnam’s] Centers for Disease Control and other medical facilities in 62 provinces and cities across the country.”
Various officials are accused of reselling the kits for public use for $20, a 45% increase over their normal price, reaping millions of dollars in illicit profit.
Meanwhile, Viet A’s PCR kits were hailed as a successful joint venture with the Military Academy of Medicine, and the company was given a government award for its entrepreneurial spirit.
Suspicions emerged after the World Health Organization said Viet A’s kits were “not eligible for WHO procurement.” That conflicted with a Science and Technology Ministry representation in April 2020 that WHO approved the kits. The Viet A director said nearly a dozen countries wanted to buy them.
Investigators said Viet A claimed it locally manufactured at least 3 million rapid test kits in 2021, but the kits were actually cheap imports from China.
In June, officials removed Health Minister Nguyen Thanh Long and Hanoi Communist Party Chairman Chu Ngoc Anh from the party and charged them with corruption.
The two were accused of violating party and government regulations, “causing severe consequences, losses to the money and assets of the state, undermining the COVID-19 fight, causing social unrest, and affecting the reputation of the party, the Health Ministry and Science Ministry,” Hanoi’s politburo and secretariat said.
More corruption cases were to come. In April, the Public Security Ministry arrested Deputy Foreign Minister To Anh Dung and two others linked to exorbitantly priced air tickets for emergency repatriation flights. Vietnam flew more than 200,000 citizens home from more than 60 countries and territories.
Mr. Dung, 58, arranged air tickets for Vietnamese, including poor migrant workers who lost overseas jobs as a result of the pandemic’s economic havoc. Others needed to fly back to Vietnam to help stricken relatives.
In May, the previous deputy foreign minister was sentenced to four years in prison for selling counterfeit medicine.
In March, security officials arrested Nguyen Dieu Mo, general director of An Binh Air Services and Tourism Trading Co., on charges of paying bribes for favors.
Some Foreign Ministry consular officials were arrested on charges of “seeking personal gain” by funneling bribes to license companies to organize repatriation flights, the Public Security Ministry said.
The Communist Party Central Committee declared in May that anti-corruption steering committees would be established in all provinces to root out illegal activity at local levels.
Concerns about corruption have raised questions about the stability of the regime, which has largely been unchallenged in the decades since the end of the Vietnam War.
The “Blazing Furnace” drive, now in its sixth year, “has failed to deter wrongdoing,” reporter Nate Fischler wrote recently in the Asia Times. “Widespread institutional corruption, particularly under scrutiny during the height of the pandemic, remains the most serious existential threat to [Vietnamese Communist Party] rule and legitimacy in the country.”
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