Not long after Ms Yen and her brother Dang Thanh Tam became the first tycoons to be elected to the country’s Communist party-controlled parliament, or National Assembly, last year, they came under personal attack in a number of obscure state-owned publications.

“Before I made my decision to join the National Assembly, I already knew that in the worst case they may try to find a way to kick me out,” the elegantly dressed 52-year-old told the Financial Times last month in an interview in the top floor business lounge of Hanoi’s Melia hotel. “I’m ready for that.”

Her comments proved prescient. Last week, the Vietnam Fatherland Front, the electoral supervisory body, recommended that she be dismissed from the National Assembly because of discrepancies on her application form. It accused her of failing to disclose that she was divorced and that she was a lapsed member of the party.

Foresight offered little consolation as she broke down in tears at a press conference on Saturday where she said she would accept her dismissal, if, as expected, it is confirmed by the National Assembly when it next meets.

The rapid political rise and fall of Ms Yen, a former local government official who made her money developing Vietnam’s first international standard industrial parks in the 1990s, underlines the wider difficulties faced by the Communist party.

China’s rulers have moved much faster to co-opt leading business people into the Communist party and the government while their counterparts in Vietnam have struggled to fit the emerging group of well-connected tycoons into their ostensibly Marxist-Leninist political narrative.

The election of Ms Yen and her brother in May last year, in polls where only a handful of heavily vetted independents were allowed to stand alongside the ruling Communist party candidates, was seen by analysts at the time as a sign of growing openness within the party.

In a country where public debate is curtailed by overt censorship, Ms Yen has been outspoken in her attacks on corruption and wastefulness at state enterprises and her calls for a level playing field for the private sector and foreign investors.

But her downfall, played out in full public view, raises questions about the direction of the party at a time when the government is trying to implement wide-ranging reforms of the debt-ridden and inefficient state enterprise and banking sectors. These changes are vital if Vietnam is to rekindle its waning economic prospects but will challenge vested interests within the government, party and business community.

“One of the main stories of the last 10 years in Vietnam has been the rise of quasi-private sector oligarchs,” says one person who has worked with Ms Yen and is a close follower of the opaque political scene. “The battle between her and her detr... is an effort to define what the rules of the game will be for the new capitalist class in Vietnam.”

Some analysts say that the predicament of Ms Yen, whose Tan Tao group also invests in power plants, education and media, hints at continuing rifts within the party leadership. She is widely seen as being close to Truong Tan Sang, who holds the largely ceremonial post of president but lost out last year in an attempt to unseat the country’s most senior leader, Nguyen Tan Dung, as prime minister.

“I speculate that her success has rankled some powerful individuals who are not fans of Mr Sang,” says Carl Thayer, an expert on Vietnamese politics at the Australian Defence Force Academy in Canberra. “Whether or not they are supporters of Nguyen Tan Dung is unclear but they appear to have sanctions to continue with their sleuthing into her background and then providing titbits to the press.”

In an email sent to the FT on Saturday, Ms Yen said that she had been “slandered, libelled and abused” by certain newspapers but denied there was a “conspiracy” against her. She said that while her declaration may not have been sufficient, she had not acted dishonestly as she did not believe she needed to disclose a former marriage or her lapsed party membership.

Ms Yen added that, if dismissed, she would concentrate on developing her not-for-profit Tan Tao university, recently established with backing from Mr Sang, and her business interests.

But, with the government caught between the need to reduce persistently high inflation and boost sagging growth while also struggling to reform state-owned enterprises, she is worried about the economic outlook.

“There’s still a lot of risk in Vietnam because the law is not yet well established, regulations are changing all the time and macro policy is also changing,” she told the FT last month. “Right now we are pulling ourselves down but the world doesn’t wait for us. Indonesia, the Philippines and even Myanmar right now are changing and attracting foreign investors by improving their macro policy mechanism.”

By Ben Bland - The Financial Times - April 27, 2012