Ha Van Tham, former chairman of the board of the private Ocean Bank, was taken into police custody in Hanoi on Friday for "violating lending regulations," the Ministry of Public Security said in a statement posted on its website late Friday. Police searched his house and workplace.

Tuoi Tre newspaper reported Saturday that Tham in 2012 approved a loan of 500 billion dong ($23.5 million) to a private real estate company without proper collateral and the company is likely to default on the loan.

Tham's arrest came as Vietnam is trying to clean up high levels of bad debts in its banking system, which have dragged down economic growth in recent years and caused public anger.

The debts have climbed to 8% of the outstanding loans as of July this year, according to the State Bank of Vietnam, which targets to bring the bad debts level down to 6% by the end of this year.

The central bank said in a statement it has suspended Tham as chairman of the board of the Ocean Bank after finding he committed "serious law violations" and to ensure the bank's operations are safe, stable and are in line with the law.

Tham was chairman of the conglomerate Ocean Group with business interests in real estate, banking, security, retails and hotels. Ocean Group is a major shareholder of unlisted Ocean Bank.

Ocean Group's shares on the main bourse, Ho Chi Minh City Stock Exchange, tumbled 11% since Wednesday amid rumors of Tham's arrest to close at 10,900 dong (51 cents) on Friday. He was the 8th richest man in Vietnam's stock exchange at the end of 2013.

Bad debts are traced to the late 2000s, when Communist authorities encouraged state-owned banks to hand out easy credit to investors and developers as part of an effort to stimulate the economy, particularly the real-estate sector. The property boom crashed and banks are weighed down with bad debt, much of it owed by politically connected conglomerates.

In June, a court in Hanoi sentenced Nguyen Duc Kien, the founder of Asia Commercial Bank, one of Vietnam's largest, to 30 years in jail after finding him guilty of fraud, tax evasion, illegal trade and "deliberate wrongdoing" in scams at investment companies run by him.

The Associated Press - October 25, 2014


Vietnam bank tycoon in police custody for lending fraud probe

The chairman of a Hanoi-based bank was detained Friday as part of an ongoing probe into allegations that he had violated lending regulations.

Police from the Ministry of Public Security have detained Ha Van Tham, Chairman of Ocean Bank, for four months while they looked into the charges against him, a ministry official told Thanh Nien Friday afternoon. Police searched his house and workplace at around 7.30pm.

Earlier on the same day, the State Bank of Vietnam, the country's central bank, announced that the board of Ocean Bank on Oct. 23 dismissed Tham, 42, from his post in Ocean Bank following allegations of “seriously violating banking regulations.”

"Through investigation, the State Bank of Vietnam has found some serious violations of the law by Mr. Ha Van Tham himself," it said in a statement.

Tuoi Tre newspaper reported Saturday that Tham in 2012 approved a loan of VND500 billion ($23.5 million) to Trung Dung real estate company without proper collateral. Trung Dung is likely to default on the loan, Tuoi Tre said.

“The State Bank of Vietnam is closely cooperating with relevant authorities to strictly deal with the violations at Ocean Bank under the law,” the central bank said on its website, without elaborating any further.

Before being arrested, Tham, a Doctor of Business Administration from US-based Paramount University of Technology, had been Chairman of Ocean Bank since 2007.

He was Chairman of property developer Ocean Group and hotel operator Ocean Hospitality.

Ocean Group holds a 20 percent stake in Ocean Bank and more than 75 percent in Ocean Hostapility, Ocean Securities, Ocean Media, Ocean Retail, and commodity exchange INFO, the group says on its website. Ocean Group's shares on the main bourse, Ho Chi Minh City Stock Exchange, tumbled 11 percent since Wednesday amid rumors of Tham's arrest to close at VND10,900 (51 cents) on Friday.

Tham was the 8th richest man in Vietnam's stock exchange at the end of 2013.

He had earned many national titles including “Outstanding Vietnamese Businessman” in 2009 and “the 2011 Red Star Award” – which honors outstanding young entrepreneurs.

As Tham had been removed from his post, Ocean Bank general director Nguyen Minh Thu was voted as new chairman by the lender’s board of directors, the central bank said. Ocean Bank’s business is unaffected by this case, it added.

Ocean Bank, headquartered in Hanoi, was founded in 1993. The lender said in April it aims to raise its registered capital from VND4 trillion (US$188 million) to VND5.35 trillion ($252 million) by this December. It posted a pre-tax profit of VND232 billion ($10.9 million) last year.

By Anh Vu - Thanh Nien News - October 24, 2014