May 7, 2006

Vietnam's Deep-Rooted Corruption Threatens Development


HANOI, Vietnam — The scandal started with a few bets on soccer games — $7 million worth of bets — and it raised such a ruckus here that even the leader of the Communist Party joined in, saying in late April that corruption "threatens the survival of our system."

It was a shocking statement from the most powerful man in the land and reflected serious concern at the top over one of the most corrosive and intractable problems in this fast-developing country.

The bets were reportedly placed by the leader of PMU18, an executive agency that handles hundreds of millions of dollars in foreign aid for construction projects. The huge amounts involved were a sign of the audacity of the corruption that seems to pervade Vietnam. In just one bet, the local news media reported, $320,000 was lost on a match between Manchester United and Arsenal in Britain.

The discovery of the bets set investigators on a trail of palatial houses, mistresses, luxury cars and protection money that led to the resignation in early April of the minister of transport and the jailing of his deputy, Nguyen Viet Tien. Three men implicated in the scandal had to be dropped from a list of nominees to join the Communist Party Central Committee that month.

No one outside the ruling circles knows whether the investigators have reached the end of their trail or whether powerful figures have put a stop to their work. But already this is the most far-reaching and politically damaging of several similar scandals that have chipped away over the years at public confidence in the integrity of the country's leaders.

As Vietnam has opened its economy to the rough and tumble of the free market, officials have spoken often of the need to combat corruption. But investigations and prosecutions have never publicly touched the highest-ranking members of the party and government.

This is a country with many layers of officialdom and large, opaque government agencies that control broad areas of the economy with little oversight. The international monitoring group Transparency International has rated Vietnam as one of the most corrupt nations in Asia.

In February, Merrill Lynch said corruption was one of the primary complaints of foreign investors in Vietnam. "The sheer scale of vested interests will make the process of reform a long and slow one," it said in a report. It suggested employing "a healthy degree of emerging-market cynicism."

Not everyone takes such a dire view.

"I don't see corruption here running totally out of control," said Martin Gainsborough, a Vietnam specialist from Bristol University and the author of a special report about the outlook for reform.

"Yes, corruption is endemic," he said. "Yes, it's widespread. But it is not as endemic as in some other places."

Whatever its scale, corruption has particular significance here because Vietnam is a one-party state in which the ruling Communist Party's legitimacy depends on public respect.

The threat to the system, analysts say, is a perception that many party members are busier getting rich than carrying out their duties. If the economy were suddenly to slow, they say, that could become a focus of discontent.

Mai Chi Tho, a former minister of the interior and a member of the party's old guard, said the damage was already being done. "There is now a serious crisis of trust among our people and in our party," he said in April.

The controlled news media, testing its limits with investigations and passionate commentaries, has offered a taste of this discontent.

Thanh Nien, a daily newspaper, called the PMU18 case a milestone and said it should spur action by "all Vietnamese patriots," whose taxes were enriching their leaders.

"The country cannot stand any longer the 'tumor' threatening to metastasize, ravaging its host body," the newspaper declared recently. "Now, more than ever, just cut out the tumor from the body before it is too late."

The scandal transfixed the nation before the Communist Party Congress in April, with several elder statesmen like Mr. Tho saying the party they had built was betraying its heritage.

Most wounding was a comment by Vo Nguyen Giap, the former general who is a symbol of Vietnam's victories over the French and the Americans. In a widely quoted comment, he said, "The party has become a shield for corrupt officials."

The Communist Party has been paying more attention to public sentiment, and its top leader, General Secretary Nong Duc Manh, may have felt compelled to use strong words when he spoke of a threat to the survival of the system.

"The degradation in terms of political ideology, moral quality, lifestyle, opportunism, individualism and bureaucracy, corruption and wastefulness by cadres and civil servants is serious," he said at the congress, which meets every five years.

The question among local and foreign analysts has been whether these are simply words or whether they signal real action.

But Mr. Manh's predecessor as general secretary, Le Kha Phieu has talked of the limits to what even the most powerful leaders can do. "We should say frankly to each other that corruption is still widespread at a serious level," he told local journalists in 2005. "Myself and Vo Van Kiet, the former prime minister, knew of some particular cases but could not unravel them and make them public.

"Corruption is guarded by the perpetrators and even defended by outside sources," he said. "This really is a fierce battle in which, if we wish to win, the Party and the State must take a closer look at themselves."

Over the years the government has tried to address the problem, and hundreds of mid-level officials have been investigated and arrested.

After an uprising in 1997 against corrupt officials in Thai Binh Province, Mr. Phieu introduced a set of procedural safeguards at the local level. The party has put in place a monitoring commission, though its power is limited.

The latest in a series of anticorruption laws is to take effect soon, but specialists say that like its predecessors it is unlikely to have much immediate or far-reaching impact.

"Implementation of anticorruption programs is plagued by a paradox: the very actors posited to be the source of the problem are those most critical to implementation success," said a recent report by international aid agencies.

Under the country's closed government system, though, there are no independent actors. If, as Mr. Manh said, corruption threatens the survival of the system, its cure may require changes to the system itself.

That is the view of Le Dang Doanh, an official in the Ministry of Planning.

"If you don't change the system, if you don't introduce transparency, a counterbalance of power, a real voice of the people, a responsible and independent press, you could hardly stop corruption," Mr. Doanh said.

"I argue that only 5 percent of the iceberg has been revealed — less than 5 percent," he said. "The other 95 percent is hidden below the surface."