HANOI, Vietnam – Ask a law-abiding expat about Vietnam’s criminal justice system, many foreigners, I’m sure, are impressed by the country’s hardline stance against white-collar crime.
Consider some reactions to online reports of the death sentence issued recently for Vu Viet Hung, a former director at state-owned Vietnam Development Bank, for his role in a $93 million scam:
-- “Would love to see some Wall Street bankers guillotined.”
-- “The USA sure could take lessons from Vietnam in dealing with fraudulent transactions.”
Perhaps even the state of Texas, which is fond of capital punishment, would balk at lethal injections for such corporate criminals. Still, it’s not hard to understand the admiration for tough punishment.
After all, no Wall Street banking executives have been criminally charged in connection to the 2008 financial crisis. In the U.S., banking regulators have civil enforcement powers – they can levy fines, essentially – and can refer criminal cases to the Department of Justice. But America’s “too big to fail” banks also seem to be too big to bring to trial.
So in America, top-tier white-collar crime typically is resolved with negotiated pleas and massive fines, like the $20 billion levied against J.P. Morgan in 2013.
This happened under the supervision of CEO Jamie Dimon. But did heads roll? Certainly not Dimon’s. J.P. Morgan’s board decided to increase his compensation to $20 million, up from the $11.5 million he earned in 2012 and closer to the $23 million he made in 2011.
Understand that, in 2012, Dimon had endured an embarrassing 50 percent pay cut after the “London Whale” scandal revealed that traders manipulated bank records to cover up $6.2 billion in losses.
Now, none of this suggests a similarity between Vu Viet Hung and Jamie Dimon. One is a Teflon-coated master of the financial universe, the other clearly is not. One reason Vietnam is so harsh on its miscreant bankers is the nation’s anemic economic condition.
All considered, Hung might be more akin to America’s notorious Bernie Madoff because both engaged in old-school frauds and got caught.
While Madoff conned investors with his Ponzi scheme, Hung and his co-conspirators were convicted of enriching themselves by engineering about 70 bogus export contracts. Some of Hung’s cohorts were sentenced to life in prison and the others received sentences ranging from 3 to 20 years, including one suspension.
Madoff and Hung both ripped off people the old-fashioned way. But what is also troubling is that old joke about the Golden Rule: He who has the gold makes the rules.
The global economy was on the verge of a depression in 2008 because of the way, about a decade earlier, American lawmakers and President Clinton embraced banking reforms pushed through by Wall Street financiers. The reforms that decriminalized practices that were previously illegal – and millions of Americans in the middleclass of the world’s powerful economy got screwed out of their homes and jobs while the nation’s wealth was redistributed to the penthouse.
As it happened, Hung’s sentence was announced the same week the news broke of the jailhouse interview with Madoff, in which he declared that he “is not a great fan of redistribution of wealth” and considered President Obama “too socialistic.”
So maybe Vietnam is on to something. White-collar crime is all about stealing money – so perhaps white-collar punishment shouldn’t just try to take money away, but something more precious: their freedom.
Perhaps the right approach is to hold top executives personally accountable and criminally responsible for corporate wrongdoing. Whether it’s the peddling of toxic loans or the dumping of toxic waste, companies are typically slapped with fines, sometimes as part of plea bargains in which they admit no wrongdoing.
In America these costs, often tax deductible, can be shrugged off as “the price of doing business” and simply passed on to the consumer. Perhaps America, like Vietnam, would benefit by putting more corporate suits in prison garb. That might get everyone's attention.