Corruption in Vietnam is common. In the Transparency International Corruptions Index 2023, Vietnam was ranked 83 out of 180 countries. This was a slight decline from 2022 when the country was ranked 77, but a big jump–36 places–since 2014 when it came in 119th place. Indeed perceptions of corruption in Vietnam have improved but it is still endemic and a big part of doing business in Vietnam. With this in mind, this cheat sheet runs through the basics of corruption in Vietnam that foreign firms looking to enter the market should know.
Petty corruption in Vietnam
Corruption is spread throughout Vietnamese society and in many ways has become normalised. It’s not unusual for police officers to take cash on the spot for traffic violations. This often ends up in their pockets rather than state coffers. This kind of petty corruption can be challenging to avoid. At times, foreigners can engage in petty corruption without even knowing it–it is common for traffic fines to legitimately be paid at the time a fine is issued rather than to have fines sent to perpetrators in the mail. As such it’s difficult to know if a fine is being paid or a bribe.
Furthermore, foreign firms using local agencies and local staff may find that small bribes are being paid on their behalf to speed up visa applications and project approvals. Wages in the pubic sector are very low, particularly in entry level positions, and this kind of corruption is used by these public service employees to supplement their income.
Bribery in Vietnam
Bribery is defined under Article 364 of Vietnam’s Criminal Code 2015. Specifically, it states that:
“Any person who directly or through an intermediary gives or promises to give any… benefits to an office holder or another person or organisation in order to influence him/her to perform or not to perform certain tasks in the interests of or at the request of the bribe giver shall be liable to a fine of from VND 20,000,000 (US$780) to VND 200,000,000 (US$7,800) or face a penalty of up to 3 years community sentence or 6 to 36 months imprisonment.”
These fines are relatively low comparatively speaking. The minimum wage in Vietnam is about US$200 and therefore, this has done little to deter offenders from engaging in bribery.
The Van Thinh Phat Scandal
Probably one of the most well-known cases of corruption in Vietnam in recent years was that of Truong My Lan. The head of real estate firm Van Tinh Phat, Lan reportedly embezzled some US$12.5 billion through falsified bank loans issued to her real estate company through a bank in which she also had a controlling interest. This made global news firstly because it was such a phenomenally huge amount, and then because Lan was given a death sentence for her crimes. More to the point, however, Lan bribed a number of State Bank officials with millions of dollars to look the other way when she was issuing her myriad of fake loans.
Grand corruption in Vietnam
There have been a number of cases of grand corruption in Vietnam in recent years whereby high-level officials have abused their power to pilfer from state coffers. In just the last 18 months or so several leaders at the top of Vietnamese politics have resigned after being caught up in corruption investigations.
Viet-A COVID-19 Test Kit Scandal
One of the most well-known cases of grand corruption in recent times was the Viet-A COVID-19 test kit scandal. Essentially, a medical supplies company was producing test kits that it claimed were World Health Organisation-approved but were not. It was then selling these to health departments around the country at inflated prices and paying local health officials a cut. This was, however, uncovered with a broad investigation ensuing that roped in a number of officials as well as the Minister of Health at the time, Nguyen Thanh Long. There have so far been millions of dollars in restoration paid and a number of officials are serving lengthy prison sentences.
Media corruption in Vietnam
Media corruption in Vietnam has become fairly normalised. This is generally done through the practice of gift-giving whereby media relations professionals provide reporters with gifts to encourage favourable coverage. This is often in the form of cash in an envelope handed over when reporters check in at an event. It is not common for reporters to declare these gifts in their reporting.
Corruption in sports in Vietnam
Professional sports leagues in Vietnam have struggled to develop on the back of limited investment and low pay for sports players that has resulted in players developing side hustles like match-fixing. The Vietnamese Premier League was voted the third most corrupt league in the world back in 2016, and not much has been done to clean up Vietnamese soccer since–As recently as February, five players were charged for match fixing.
It extends to less traditional sports as well. A total of 32 players and coaches were suspended from the Vietnam Championship Series of the video game League of Legends, earlier this year, after allegations of match-fixing surfaced. The allegations came to light back in March and saw the competition suspended while an investigation took place.
Corruption in Vietnam for foreign firms
Greasing the wheels in Vietnam can make doing business nominally easier and faster. Prosecutions of acts of corruption are often well beyond the volume of corruption taking place. That said, foreign firms should be mindful that there is legislation in most countries that prohibits engaging in corruption abroad, as in, a company in the United States engaged in corrupt activities in Vietnam can be prosecuted in the United States for said acts. In the US, this is codified in the Foreign Corrupt Practices Act of which there are similar laws in most developed economies.
Securency and Note Printing Australia
In 2009, the Australian Federal Police opened an investigation into Securency and Note Printing Australia who had allegedly bribed officials of Malaysia, Nepal, Indonesia and Vietnam to secure contracts to provide these countries with polymer banknotes. The investigation and subsequent prosecution would last for ten years, wrapping up in 2018, with the two companies fined AU$21 million for bribery.
Albemarle Corporation
In September of 2023, chemicals manufacturer Albemarle Corporation was fined US$218 million under the United States’ Foreign Corrupt Practices Act. The company had admitted to paying bribes through third parties and the employees of its subsidiaries to gain contracts with two state-owned oil refineries in Vietnam as well as a handful of other countries.
What’s next?
Corruption in Vietnam is a challenge that many foreign firms will come across doing business in Vietnam. While it can be tempting to pay for a faster approval or to secure a contract, the reality is that, if this conduct is uncovered, it can be costly in terms of fiduciary penalties and can even result in prison time.
In this light, foreign firms should make clear to their local partners that bribery is off the cards and should do their due diligence to ensure deals made through local firms are all above board. They should also make sure they are abreast of the latest developments in Vietnam’s attempts to bring corruption under control by subscribing to the-shiv.
Last updated
June 11, 2024: Added section on corruption in sport.