Identifier
Created
Classification
Origin
06HANOI771
2006-04-04 07:28:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Hanoi
Cable title:  

CORRUPTION IN VIETNAM: MINISTER FALLS, PARTY GETS

Tags:  PGOV KCOR VM 
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VZCZCXRO1271
OO RUEHCHI RUEHDT RUEHFK RUEHHM RUEHKSO RUEHPB
DE RUEHHI #0771/01 0940728
ZNR UUUUU ZZH
O 040728Z APR 06
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1362
INFO RUEHHM/AMCONSUL HO CHI MINH CITY 0861
RUEHZS/ASEAN REGIONAL FORUM COLLECTIVE
RUEHZU/APEC COLLECTIVE
UNCLAS SECTION 01 OF 04 HANOI 000771 

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV KCOR VM
SUBJECT: CORRUPTION IN VIETNAM: MINISTER FALLS, PARTY GETS
SERIOUS

Ref: A) HCMC 320; B) Hanoi 30; C) Hanoi 628; D) 05 Hanoi
3043

HANOI 00000771 001.2 OF 004


UNCLAS SECTION 01 OF 04 HANOI 000771

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV KCOR VM
SUBJECT: CORRUPTION IN VIETNAM: MINISTER FALLS, PARTY GETS
SERIOUS

Ref: A) HCMC 320; B) Hanoi 30; C) Hanoi 628; D) 05 Hanoi
3043

HANOI 00000771 001.2 OF 004



1. (SBU) Summary: The media is gleefully reporting a
sensational corruption scandal involving millions of dollars
in graft that has cost the Minister of Transportation his
job. The case amplifies the recent wave of calls for anti-
corruption reform that has dominated recent public
discussion of the upcoming National Communist Party
Congress' political platform, and exacerbated the Party's
concerns that corruption is undermining the Party's and the
Government's legitimacy. Recent anti-corruption measures
include the passage of a new law on corruption, the
establishment of two new anti-corruption authorities and,
most strikingly for us, the semi-public release of an
internal CPV report on corruption that documents the fact
that more than half of Vietnamese citizens pay bribes, and
nearly half of all civil servants admit to taking them. The
Party and the leadership are under pressure to deal with
corruption, but the problem is so big, with so many Party
and Government officials involved, that it may defeat their
best efforts. We should seize this opportunity to assist
them by approving and funding the ABA's December 2005 rule
of law project proposal. End Summary.

PMU 18
--------------


2. (SBU) Vietnam's press has been operating at maximum RPMs
over the evolving corruption story involving Public
Management Unit 18, a construction company handling large
infrastructure projects, some with substantial ODA
contributions. A business contact in HCMC noted that PMU-18
was the recipient of World Bank, Asian Development Bank and
Japanese ODA. Even by Vietnam's standards, the multi-
million dollar scale of graft in the PMU-18 case is enormous
and the case has revealed titillating details about the
gambling and nepotism habits of the senior Government
officials involved that have entranced Vietnamese readers.
The press, particularly the popular Tuoi Tre (Youth)
newspaper (Ref A),has pursued this case rabidly, a level of
transparency that the Party leadership would not have
tolerated previously. The involvement of Vietnam's national
soccer team has also captured the public's attention. The
case broke with the revelations that Bui Tien Dung, the head

of PMU-18, was part of a ring placing enormous bets on
soccer games, including games played by the national team.
This earned Dung the nickname "million-dollar gambler" and
led to a deeper investigation that netted even larger fish.


3. (SBU) The Deputy Minister of Transportation, Nguyen Viet
Tien, was implicated in the scandal by a March 28 Ministry
of Public Security report and required to step down; on
March 30, a spokesman for the Prime Minister declared that
"the Transport Minister must take responsibility, and after
that deputy ministers must follow. Joint responsibility
will be defined through investigation." On April 1, the
Party announced that a proposal to remove Transport Minister
Dao Dinh Binh had been submitted to the Politburo. Binh
submitted his resignation April 3. Speaking to reporters
afterwards, Binh said he "takes full responsibility for all
wrongdoing." World Bank representative Klaus Rohland told
the Ambassador April 3 that First Vice Minister Pham The
Minh is in charge at the Ministry of Transportation.


4. (SBU) The activity has not been confined to the
Government. The Communist Party has also been drawn in, and
is concerned to the point where senior Politburo member Phan
Dzien (among the most powerful Party officials) gave an
interview to the staid Party mouthpiece "Nhan Dan" (People's
Daily) on the PMU 18 case. In a remarkable public display
of Party humility, Phan Dzien said the Party bears
responsibility for corruption in its ranks and in the
Government. "The case proved a serious decline in the
virtue and lifestyle of many cadres and Party members, many
of whom hold senior positions," he said, in the widely read
(and reprinted) article.

The Larger Problem
--------------


5. (SBU) The PMU 18 scandal is the dramatic and photogenic
tip of a huge corruption iceberg in Vietnam. The
concentration on market reforms and economic development
over the last 20 years with little or no attention to public
administration reform has led to an epidemic of rent-seeking
behavior in virtually every sector of the State. Not only
big construction contracts, but every single other
transaction Vietnamese people conduct with their Government,

HANOI 00000771 002.2 OF 004


including medical treatment, land transactions, business
licenses, school registration and, above all, traffic
enforcement, involves paying bribes of various sizes. The
corruption that bedevils average citizens has been verified
by external observers; Transparency International's
Corruption Perceptions Index (CPI) for 2005 groups Vietnam
with Belarus, Eritrea, Honduras, Kazakstan, Nicaragua,
Palestine, Ukraine, Zambia and Zimbabwe in a ten-way tie for
107th place with a score of 2.6. "Less than 3 on the CPI,"
TI says, "indicates a severe corruption problem."


6. (SBU) Vietnam's own internal corruption survey is more
specific, and even bleaker. The Communist Party's Internal
Affairs Commission, working with the Swedish International
Development Agency, conducted a year-long survey into
corruption behaviors and attitudes across Vietnam. They
surveyed and conducted interviews with thousands of citizens
and civil servants in more than a dozen ministries and State-
owned enterprises, and produced a report in November 2005.
The 100-page report reveals the pervasiveness of corruption.
More than 40 percent of the civil servants polled admitted
to taking bribes. More than 60 percent of the Vietnamese
people reported having to pay bribes. Land and construction
agencies are perceived as corrupt by more than 90 percent of
people and businesses, and by more than 85 percent of civil
servants. Over 46 percent of businesses say they routinely
pay bribes when they meet with difficulties; 55 percent of
businesses give "presents" to public officials on holidays
to avoid problems in the future. A quarter of businesses
surveyed pay pre-emptive bribes to avoid "difficulties."


7. (SBU) The justice sector is no better. In seven
provinces, 50 percent of people interviewed said they "pay
extra money" when going to the People's Procuracy or the
People's Court. Over 57 percent said they pay extra money
in the event of a traffic violation. Le Manh Luan, Chief of
Staff of the Internal Affairs Commission of the CPV, told
Poloff that as high as those numbers seem, they are probably
even higher in reality because they only reflect what people
were willing to admit in face-to-face interviews; if the
survey accounted for people's reluctance to admit giving or
taking bribes, the percentages would likely be higher.
Nguyen Quang Ngoc, the Swedish Embassy expert who also
worked on the report, agreed that the numbers almost
certainly understate the scope of the problem.


8. (SBU) The most striking aspect of the CPV's report may
not be what it contains, but rather what they did with it:
the normally secretive and uncommunicative Communist Party
allowed the report to be translated into English and
circulated among the diplomatic and NGO community. They
also sent copies to Vietnamese news agencies, as well as all
public offices. According to press contacts, the CPV
stopped short of permitting the news agencies to publish the
details of the report, which is still labeled "draft" and
therefore considered an internal Party document. But the
relatively wide release of the report, not to mention the
willingness of the normally reclusive Internal Affairs
Commission (which had been dodging us for almost two years)
to meet with us, was unprecedented.


9. (SBU) "Our greatest concern is bribery and the connection
between state officials and the people's money," the CPV's
Luan told Poloff. "Last year we were able to prosecute only
300 cases of corruption in the whole country, and yet the
public sector climate is such that more than one-third of
public officials believe that a bribe-related `bonus' is
normal and that they deserve compensation outside their
regular salary." The circulation of the report, he said, is
designed to send a message to public employees that the
Party and the Government are getting serious about
corruption, and that it will have consequences. The new
anti-corruption law (passed in November 2005),together with
major statements by the Prime Minister to the National
Assembly that he will head the new national anti-corruption
standing committee, are designed to send a similar message
to the people.


10. (SBU) That message is a very important one, because it
goes to the heart of the Party's concerns about corruption:
as the most pressing issue for the Vietnamese public (64
percent of the population rates the issue as "the most
serious matter" facing Vietnam today),the Party's apparent
inability to solve the corruption problem is corrosive to
its popular legitimacy. In early March, at the end of the
officially-sanctioned public comment period on the draft
Political Report to be adopted during the Party's 10th
National Congress (refs B and C),Luan told Poloff that the
Party had received more than 20,000 comments from citizens,

HANOI 00000771 003.2 OF 004


and "many" of those had focused on corruption. An editor
who created a survey on the Political Report on his highly
popular news website told Poloff that he had received "many
thousands" of responses and that most of them had been
primarily concerned with corruption.

Turning the Ship
--------------


11. (SBU) The corruption problem is enormous and well-
recognized, and it is a challenge to the Party's and the
Government's legitimacy, but considering the massive
pervasiveness, what can the GVN do about it? GVN and CPV
experts recognize that the situation has reached a point
where aggressive enforcement is not a solution; the
authorities literally cannot arrest everybody. "If we
actually arrested all the corrupt traffic officers," Luan
said, "there would be no one to control the streets of
Vietnam's cities and there would be chaos." (Comment:
Actually, chaos is an apt description of Hanoi's traffic
most days. End Comment.) This is also acknowledged in the
CPV report, where demoralized civil servants say the
pervasiveness of corruption, the lack of protection for
whistleblowers and the failure to punish corrupt officials
means that more than 80 percent of them would neither
challenge nor report corruption in their organizations.


12. (SBU) Facing this reality, Party and GVN officials
tasked with combating corruption have decided to focus on
incremental changes that strengthen the framework against
corruption rather than try to adopt a pure enforcement
approach. Luan said that the initial steps to counter
traffic police graft are to require three traffic police
officers at any checkpoint; forbid traffic police officers
from carrying more than VND 50,000 (about three dollars) on
their persons at any time; and, requiring traffic police to
sign receipts for fines collected. For higher-level
corruption, the plan is to develop clear rules and
regulations against corruption (through the new anti-
corruption law) and to adopt asset declaration rules to
assist in identifying officials who are enriching
themselves. Here, however, Luan said Vietnam faces severe
cultural obstacles. "Many corrupt officials do not keep
money or assets themselves, but instead pass their earnings
on to family members, sometimes distant ones." A corrupt
official, therefore, may show no increase at all in his
personal assets. "Making it more difficult," Luan said, "is
the fact that many Vietnamese do not use banks, and
establishing the value of land and buildings is not well
understood." The GVN and the Party rely a great deal on the
press, he said, to ferret out corruption.


13. (SBU) Relying on the press for this function causes
severe heartburn for Party and Government officials at
times, a senior Embassy press contact told Poloff with a
grin. "We report on corruption cases a lot, even when it
gets uncomfortable for the Ministry of Culture and
Information. But we tell them that if they try to tell us
to stop, we will publish the fact that they told us to stop,
and so far they think that would be worse than the
embarrassment of Government officials." Still, he
acknowledged, it is possible to go too far. One of his
young reporters did a photoessay on the homes of the senior
officials of the Hanoi People's Committee (a bastion of
political conservatism) that he had to spike because of the
potential consequences of publishing it, he said.


14. (SBU) Dr. Nguyen Van Thanh, Director of the Institute
for Inspection (an arm of the Government Inspectorate, an
agency-level inspector-general and auditing organization)
explained the main steps of the Prime Minister's action plan
on anti-corruption:

- In the next few months, the GVN will pass the necessary
guidelines and regulations necessary to implement the anti-
corruption law;
- The GVN will launch an anti-corruption awareness-raising
campaign, based at the National Academy for Public
Administration. This will include training for all
branches, agencies and ministries of the GVN;
- The GVN will establish two specialized anticorruption
authorities: one in the Government Inspectorate, and one in
the Ministry of Public Security;
- The GVN will establish a national steering committee to
coordinate anti-corruption activities; and,
- Each agency will develop a code of conduct for anti-
corruption.


15. (SBU) Dr. Thanh said that the most important part of the

HANOI 00000771 004.2 OF 004


new law is that it prevents corruption by "closing the
doors" and making public officials and the people aware that
corruption is unnecessary, inefficient and illegal. "We
need to reduce the opportunity to engage in corruption," Dr.
Thanh explained. "This will involve an anti-harassment
component of the new law. It will give people more
information, create more transparency and provide oversight
in the form of the new anti-corruption authorities to whom
the people can appeal."


16. (SBU) Luan, asked about this interpretation of the GVN's
efforts, added that although prevention will be the major
part of the anti-corruption fight and "all measures will be
made with an understanding of Vietnam's social, commercial,
economic and political context," the strategy will include
anti-corruption investigations and prosecutions.

So Important
--------------


17. (SBU) Perhaps the most insightful comments on the
importance of anti-corruption efforts came from designated
GVN Wise Woman Pham Chi Lan, veteran member of the Prime
Minister's Research Commission. "How can we build our
democracy without responding to the public's concerns?" she
asked Poloff, rhetorically. "We must do this for our own
people, as well as for the purpose of creating an attractive
climate for investors." The future of the country is at
stake, she said. "Corruption causes a brain drain in
Vietnam. Smart and dynamic young people see corrupt
officials and the public sector gobbling resources and
buying up assets with graft. It crushes their motivation to
stay in Vietnam and get rich and build the country. Without
attacking corruption, we cannot build our nation."

Comment
--------------


18. (SBU) They get it. The Party gets it, the GVN gets it
and the National Assembly gets it. The people understand,
as does the media. There is near unanimity on the issue of
combating corruption in Vietnam, even (according to the
CPV's internal survey) among remorseful bribe-taking civil
servants. However, there has been plenty of soul-searching
when other major corruption scandals have been revealed
before with no significant impact on the problem. The
challenges are daunting. The pervasiveness of corruption,
the informal personal and familial links between individuals
at the top and the networks of patronage they control and
the tiny public sector salaries that cap out for a minister
at approximately USD 200 per month present a tremendously
difficult hurdle for even the most dedicated anti-corruption
crusaders. GVN and CPV activists hold out hope that in this
area, they will be able to follow the path of Singapore,
Hong Kong, Taiwan and Korea to overcome corruption.


19. (SBU) The high profile of the PMU-18 case, the
importance to the public of the corruption issue, the CPV's
willingness to address the issue and publicize embarrassing
data, and the NA, CPV and GVN's joint efforts to address
corruption through structural reforms suggest that we have
the opportunity to make a positive contribution to the rule
of law in Vietnam. One excellent option to do that would be
to approve the ABA rule of law project funding proposal
submitted in December 2005 (Ref D); we should take advantage
of the favorable timing to move it forward as soon as
possible. End Comment.

MARINE