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Amsterdam-based ABN Amro is being sued by Industrial & Commercial Bank of Vietnam, or Incombank, to recover losses from foreign-currency trades. The state lender this year accused traders at ABN Amro of helping to cause losses by conducting speculative trades for an employee not authorized to make such transactions. The police are overseeing the investigations.
ABN Amro has transferred the funds in a combination of U.S. dollars and Vietnamese dong into two police bank accounts, Do Kim Tuyen, deputy director of police in Hanoi, said by phone today. ``The money is being held temporarily by the police until the case is resolved in court,'' he said.
Business groups, including the European Chamber of Commerce, have lobbied for a fair resolution to the case, which they say could undermine investor confidence in the communist-ruled nation. Vietnam, which is set to formally join the World Trade Organization by January, needs to uphold the rule of law to attract investors to an economy that the World bank says may expand faster than the government's forecast of 8 percent growth.
`Broader Problem'
``The rule of law and the institutions that enforce the rule of law need to be fairly compatible with what's expected in relatively developed countries, and clearly Vietnam doesn't have that,'' said Peter Tebbutt, senior director of financial institutions at Fitch Ratings in Hong Kong. ``It's just one issue that highlights a broader problem that Vietnam needs to work on over a number of years.''
Anna Langford, a Hong Kong-based spokeswoman for ABN Amro, didn't answer calls made to her office and mobile phones. ABN Amro said on Aug. 11 the trades were valid and had been settled.
The Incombank employee said to be involved in the currency trades and four ABN Amro staff were arrested, the Financial Times reported on Aug. 8. Incombank is one of the country's four main government-run lenders.
``Some individuals involved in this case still should face charges, but ABN Amro also has to take responsibility for not properly monitoring its staff,'' Tuyen said.
ABN Amro transferred about $3.8 million into a U.S. dollar bank account at the Bank for Foreign Trade of Vietnam, also known as Vietcombank, and 12 billion dong ($745,619) into a local- currency account at the State Treasury, Tuyen said.
The transfer was reported in Thanh Nien, a Vietnamese newspaper, Agence France-Presse said Nov. 25.
`Criminalization of Cases'
The European Chamber of Commerce in Vietnam sent Prime Minister Nguyen Tan Dung a letter in August, asking the leader to pay attention to the ``criminalization of business cases,'' said Alain Cany, chairman of the business group and chief executive officer of HSBC Holdings Plc in Vietnam. The group has yet to receive an official reply, he said by phone today.
Foreign banks operating in Vietnam also sent a letter to State Bank of Vietnam Governor Le Duc Thuy and met with central bank officials to discuss the case, Cany said.
``In any country you operate, you have to be cautious about your dealings,'' Cany said.
Prime Minister Dung said in October initial investigations into the dispute showed ABN Amro ``had seriously violated Vietnamese laws and international practices,'' according to the government's Web site.
ABN Amro opened its first representative office in Vietnam in January 1993. It converted its second representative office, opened in Hanoi a year later, into a full branch in January 1996.
Vietnam has the fastest-growing and newest stock market in Southeast Asia. The nation's main bourse wants to increase the value of the six-year old stock market to between 20 percent and 30 percent of gross domestic product from 6 percent, Tran Dac Sinh, director of the Ho Chi Minh City Securities Trading Center, said in August.
By Netty Ismail, November 27, 2006, Bloomberg
