Corruption probes are stain for Vietnam's leadership
Several cases fuel class resentments as wealth grows
HANOI - Mai Thanh Hai, son of Vietnam's deputy minister of trade, was a fixture in the capital's expensive nightclubs. The 32-year-old, himself a Trade Ministry official, lived in a townhouse worth a reported $1.5 million; he and his wife, a former beauty pageant queen, traveled the town in a black Lexus.
Hai's flashy lifestyle ended Sept. 30, when he was arrested in an investigation of possible corruption involving the allocation of Vietnam's garment-export quota to the United States. He is accused of accepting large bribes -- $30,000 on one occasion -- from Vietnamese garment companies, in exchange for enlarging their share of the quota.
Hai's is one in a series of high-profile corruption cases in Vietnam over the past few months involving the Trade Ministry, the Agriculture Ministry, and the state-owned petroleum and shipping companies. The investigations have spotlighted the tensions that capitalism and globalization are creating in this nominally communist country: between rich and poor, between old and young, and between those with connections and those without.
"People feel furious" about the corruption scandals, said Trinh Duy Lan, 54, the director of Vietnam's national Institute of Sociology. He said Vietnamese young people have abandoned traditional values, such as Confucianism: "My generation's motto for spending was 'thrifty and incorruptible.' "
According to David Koh, a specialist on Vietnam at the Institute for Southeast Asian Studies in Singapore, systemic corruption among Vietnamese bureaucrats is partly attributable to artificially low government wages. But the astronomical sums involved in the garment-quota affair "have no basis of moral legitimacy."
Since 2002, when the US-Vietnam Free Trade Agreement took effect, Vietnam's garment exports to the United States have skyrocketed, from $50 million a year to a projected $2.4 billion this year. In June 2003, Washington imposed an import quota to stem the tide.
The Trade Ministry was assigned to allocate the quota among Vietnamese garment manufacturers. Each company receives quotas based on the quantities it has exported, multiplied by a coefficient known only to government officials. Higher quotas are supposed to be awarded to companies that draw bigger orders.
Vietnamese garment executives say that they have had to pay Trade Ministry officials to get quotas approved, and that an illegal market in quotas has sprung up.
While the official price of a quota export license ranges from a few cents to 40 cents per dozen items, the black-market price can be the equivalent of $24 per dozen, driving up supplier costs. Shipments are stranded for lack of export licenses, and factories run on a "stop-start" basis, shutting down when their quotas are exhausted.
One garment company that had difficulties with the quota was Park's Manufacturing, a US-Vietnamese joint venture based in Hanoi. The company's Korean-born president, Park Chung Mahn, says it exported 140,000 dozen pieces to the United States in 2002. But when the US import ceiling took effect in June 2003, Park's Manufacturing had not received any quotas from the Trade Ministry.
"We had 700 workers sitting idle," said a Park's official, who requested anonymity. "We couldn't pay their salaries. How were they going to feed their families?" Monthly salaries for seamstresses at Park's start at $35.
Vietnamese media have said Park's Manufacturing funneled $100,000 to an intermediary, who offered Mai Thanh Hai about $30,000 to expedite the quotas. Park's Manufacturing acknowledges that the bribe was made, , but denies that the money had come from the company. It says the bribe was the personal initiative of an employee who had borrowed the money from his family.
Either way, the company's American partners disallowed the bribe, and the employee retrieved the money and reported the incident to authorities. The employee was forced to leave the company but faces no legal charges.
Similar complaints from various companies led to an investigation by the Ministry of Public Security. Four Trade Ministry officials, including Hai, and eight others, have been arrested. No Americans have been implicated.
The Vietnamese government has vowed to eliminate the corruption. It has set up a joint government-industry body to screen quota allocations. And Monday, Prime Minister Pham Van Khai announced the creation of a nationwide agency to investigate corruption throughout the government.
Garment industry executives applaud Vietnam's campaign and link the effort to clean up the quota system to the prospect of tough competition next year in the worldwide garment industry.
As of Jan. 1, 2005, garment-import quotas within the World Trade Organization will disappear, including US quotas for WTO members. But Vietnam is not a member. Most of its competitors in the garment industry, including China, belong to the body.
"There are about 70 countries in the world that supply garments in any sort of quantity," said Colin Scott, a technical adviser to the Vietnamese industry. "The vast majority will be quota-free from the beginning of next year. Vietnam will not be." As a result, Vietnamese firms may lose many contracts to Chinese competitors.
If the quotas are poison to Vietnam's garment manufacturers, they have been manna to those who hand out the licenses.
Le Van Thang, a deputy director of the Trade Ministry's Import-Export Department, was arrested Sept. 15 as part of the anticorruption investigation. When police searched his house, they found stacks of Vietnamese currency and blank quota-allocation forms bearing a vice minister's signature.
Mai Thanh Hai, meanwhile, was known for running up large bills at 25J, a louche nightspot favored by Hanoi's young and wealthy, featuring skimpily clad go-go dancers and pounding music.
A worker there said he would come in three or four times a week with a half-dozen friends and treat them to $90 bottles of cognac.
Hai has joined the roster of spendthrift children of powerful Vietnamese caught up in scandals. Last year, after an illegal luxury-car drag race was broken up in Ho Chi Minh City, the son of a wealthy businessman tried to bribe police to drop the charges, according to local media. In 2002, the son of a high official in the Transportation Ministry was arrested in a brawl with police in Hanoi, during which he reportedly shouted: "Do you know who my father is?"
Such scandals add to the aura of wealth in the capital. Immense houses with fairy-tale gabled roofs are springing up in suburban areas around Hanoi's West Lake, but it is often difficult to ascertain who owns them. The same goes for showy hotels and nightclubs.
"No one will talk to you about how rich Vietnamese spend their money," an American restaurateur in Hanoi said on condition of anonymity. "They don't like to show off their wealth in public."
By Matt Steinglass - The Boston Globe - October 31, 2004.
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