HCMC ECONOMIC POLICE STRIKE AGAIN, MAKING GRAB FOR FAKE

C O N F I D E N T I A L SECTION 01 OF 02 HO CHI MINH CITY 000047

SENSITIVE
SIPDIS

STATE FOR EAP/MLS AND EEB/TPP/IPE JURBAN
STATE FOR EEB/TPP/IPE
STATE ALSO PASS USTR DBISBEE AND RBAE

E.O. 12958: DECL: 2/10/2010
TAGS: ECON KIPR EAID ETRD VM
SUBJECT: HCMC ECONOMIC POLICE STRIKE AGAIN, MAKING GRAB FOR FAKE
VIAGRA

REF: REFTEL: A) HCMC 039

HO CHI MIN 00000047 001.2 OF 002


CLASSIFIED BY: Ken Fairfax, Consul General, Ho Chi Minh City,
Department of State.
REASON: 1.4 (b)

1. (C) Summary: Economic police in HCMC conducted another
head-line grabbing IPR bust on January 25, this time breaking up
a large counterfeit pharmaceutical ring. The ring ran under the
guise of a legally-registered local pharmaceutical firm that
purchased domestically-produced pills then re-packaged them
under top-selling foreign brands for distribution to dozens of
pharmacies throughout the city. City government sources say
that the serious nature of the threat to consumers makes it
almost certain that the 14 people arrested will be prosecuted
criminally. Notably, Pfizer's Director of Global Security raved
about the professionalism of Vietnam's police enforcers,
particularly when compared with its neighbors like Thailand.
End Summary.



Fake Pharmaceuticals Under the Cover of Legitimate Company

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2. (SBU) On January 25, 50 members of the HCMC economic police
conducted simultaneous raids around the city, bringing down a
major counterfeit pharmaceutical ring and arresting dozens of
suspects. Harry Waskiewicz, Director of Global Security for
Pfizer Corporation, told EconOff that police raided six
production facilities, six storage facilities, and one packaging
center. Media reports noted that the leader, Huynh Ngoc Quang,
who is director of joint-stock company 'Viet-Phap' (literally
Vietnamese-French) Pharmaceuticals, a legally-registered
corporation, managed to escape the initial raid but was arrested
a few days later and has since been held in solitary
confinement. Quang faces criminal charges for producing and
selling fake medicine.




3. (SBU) Mr. Quang reportedly bought medicine made in Vietnam
and used Viet-Phap Corporation facilities, as well as other
outlets around the city, to produce strips and boxes that looked
like imported pharmaceuticals. One of Mr. Quang's employees
told reporters that he worked daily from 9a.m. to 4 p.m. putting
around 10,000-30,000 fake tablets into 1,000 strips a day. Once
in their new packaging, pills were distributed to legitimate
pharmacies throughout the city. During the bust, police
reportedly seized more than 50 boxes of fake foreign medicine as
well as the equipment for production and counterfeit cases. Mr.
Waskiewicz noted that counterfeit Viagra was among the key
foreign brands being packaged, along with Eli Lilly's Cialis,
Novartis-branded products, and many others.



Pfizer Showers Kudos on Vietnam's Economic Police

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4. (SBU) Mr. Waskiewicz, who has worked on IPR violation cases
in South East Asia for the last seven years, said that he has
been "extremely impressed" by the professionalism and the
initiative of the investigative police in Vietnam. He noted
that his security team has had a series of cooperative efforts
with police on counterfeit pharmaceutical cases involving Pfizer
over the years, though this bust was by far the largest. He
said police launched the investigation entirely on their own
beginning in October, employing elaborate surveillance and
wiretapping measures. Armed with intelligence that Pfizer
products were among the infringed goods, they notified the
Pfizer consultant in Vietnam about the investigation and the
next steps.




5. (C) Mr. Waskiewicz emphasized the sharp contrast between the
recent HCMC case and similar counterfeit pharmaceutical cases in
Thailand, in which his team would have to acquire as much
incriminating evidence as possible and hand over all their
intelligence to authorities "on a silver platter." At best, Thai
police would then seize the goods, but would not go a step
beyond to investigate possible links to other rings, scour
copies of sales records or prosecute the perpetrators. In
contrast, he said, Vietnamese police tend to act totally of
their own accord. Waskiewicz said he didn't know what motivates
them, but stressed that Vietnam's investigative police have
"never once asked for a dime" from Pfizer for their cooperation.
In contrast, police in Thailand, he said "won't lift a finger

HO CHI MIN 00000047 002.2 OF 002


unless there's a direct financial incentive involved." He
surmised that Vietnam's police's motivation might to some degree
come from a sense of duty, noting that a high level police
official he'd dealt with on another case had once received FBI
training and told Waskiewicz he felt obligated to "return the
favor."



Don't Mess with the Public's Health

--------------


6. (SBU) The quality of investigations and the willingness of
police to act, in Mr. Waskiewicz' experience, has been equally
true when Pfizer has dealt with Hanoi's police force in
counterfeit cases along the northern Chinese border. In fact,
he said he was taken aback when the former deputy director of
the economic police in Hanoi once said passionately that
pharmaceutical infringers deserved the "death penalty" for their
crimes.




7. (SBU) While the death penalty is unlikely in this case, Mr.
Waskiewicz said it wasn't even a question that the ring leaders
would be prosecuted criminally. HCMC police told him that all
of the suspects were being held in solitary confinement and
would likely remain there until their trial, possibly more than
a year out due to the complexities of the case. Authorities
also told him that the ringleaders were expected to receive a
seven to ten year sentence, while the accomplices would likely
get three to seven years.



Comment

--------------


8. (SBU) Three aspects of this story jump out: the praise that
Mr. Waskiewicz showered on Vietnam's investigative police force,
his mention that police don't need "incentives" to take action,
and the quote that FBI training motivated police to better
enforce Vietnam's IPR law. Still, GVN authorities are only
beginning to understand the importance of protecting IPR on its
own merits. IPR violations are not pursued with the same vigor
as crimes that endanger public health or involve politically
sensitive materials. Thus, rights holders that have their goods
counterfeited or copied without associated consumer safety or
political concerns aren't likely to see deterring penalties,
i.e. criminal prosecution, applied to their cases. However, if
counterfeit products are dangerous to consumers, IP rights
holders like Pfizer can ride the coattails of harsher
punishment. Whatever the motivating factor for increased police
action on counterfeit goods, the latest crackdowns are an
encouraging step in the right direction. End Comment.
FAIRFAX