Vietnam Arrests Ex-Shipping Boss Amid Economic Backlash

By JAMES HOOKWAY

Vietnam said police arrested the former chief of a debt-laden state shipping company, the latest of several executives detained amid public furor at the nation's faltering economy.

Duong Chi Dung fled Vietnam in March, when police began investigating allegations of corruption at Vietnam National Shipping Lines and detained several top executives.

Vietnam's economy has stumbled badly after a decade of rapid growth, prompting the country's Communist leaders to reassess the role played by its state-owned enterprises.

The arrest comes after a pair of high-profile detentions last month. Banking mogul Nguyen Duc Kien was arrested Aug. 21 for alleged improper lending at three small private-investment firms he runs.

That was followed by the arrest of Ly Xuan Hai, the chief executive at Asia Commercial Bank, which was founded by Mr. Kien in the 1990s but which he left in 2010. Mr. Kien and Mr. Hai couldn't be reached to comment.

The arrests partly reflect growing pressure on Prime Minister Nguyen Tan Dung from within the Communist Party to clamp down on businesses, especially state-owned firms, which were perceived as ignoring management rules during Vietnam's boom years, according to diplomats and policy observers.

Figures such as President Truong Tan Sang "have sought to curtail some of [Prime Minister] Dung's freewheeling ways, including promotion of high growth rates with little attention to costs," said Carlyle A. Thayer, a professor at the Australian Defense Force Academy, where he specializes in Vietnam and Asia security issues.

In late 2010, Premier Dung defeated a leadership challenge in part by admitting his role in allowing the mismanagement of state-owned firms, particularly shipbuilder Vinashin, which nearly collapsed under debt of about $4.5 billion.

Nine Vinashin executives were sentenced this year to prison terms of up to 20 years on charges of mismanaging state resources. Since then, Premier Dung and other top leaders have attempted to accelerate their efforts to modernize the country's state sector, which accounts for around 40% of Vietnam's economy.
Progress has been slow, however, and the sense of crisis pervading what was once one of Asia's most promising new emerging markets was reinforced by the central bank's admission last month that nonperforming loans had nearly doubled this year, to about 10% of total lending.

Duong Chi Dung fled from his home just before investigators arrived, prompting widespread accusations that he had been tipped off. Local police quickly obtained an international warrant for Mr. Dung's arrest.

A government statement said he was extradited and taken into custody Tuesday, while state-run media said he was initially detained in an unidentified neighboring country.

Mr. Dung couldn't be reached to comment.

If convicted, Mr. Dung potentially faces a lengthy prison term. Police have accused Vietnam National Shipping Lines, or Vinalines, officials of mismanaging the state firm's resources by spending $5 million on a floating dock.

Government inspectors said in May that the firm also had defaulted on five loans for a total of $1.1 billion, and racked up millions more dollars in losses by buying substandard, aging foreign vessels.