Corruption in Vietnam

RBA offshoot's $10m for 'translation service'

EXECUTIVES of a Reserve Bank of Australia subsidiary at the centre of a global contracts scandal claimed a Vietnamese agent paid at least $10 million in commissions had "primarily" worked as a translator.

Melbourne-based Securency Pty Ltd won a major contract in 2002 to supply polymer banknotes to Vietnam after hiring a company that employed the son of the governor of the State Bank of Vietnam as its local agent.

Company insiders have revealed that Securency paid large commissions, including some to a Swiss bank account, to the Hanoi-based Company For Technology and Development, or CFTD.

Securency is half-owned by the RBA and supplies polymer material to make banknotes in Australia and 26 other countries.

A 2007 Vietnamese Government corruption inquiry into the Securency deal found it to be "irregular", lacking in transparency and harmful to the reputation of the bank governor, Le Duc Thuy.

In a 2007 interview obtained by The Age, Securency executives said the services provided by CFTD primarily involved translating documents, organising meetings and picking up people from the airport. They said they had no dealings with the central bank governor's son, Le Duc Minh.

The tape recording reveals claims by Securency that Australian embassies had recommended their overseas agents.

Securency is under investigation by the Australian Federal Police over commissions paid to agents to help win contracts from foreign governments.

The Age reported at the weekend that several Securency agents have been previously implicated in corruption inquiries. Securency has also paid agent commissions into offshore tax haven accounts.

Company insiders allege the large commissions paid to agents in corruption-prone countries exposed Securency to allegations money may have been used to pay kickbacks.

During the 2007 interview with a foreign journalist, Securency's managing director, Myles Curtis, refused to confirm whether commissions had been paid to CFTD.

"A lot of the (CFTD's) roles in the early stages were to do with interpreting and translating … so that is the primary role they play. So it is the liaison between the state bank," he said.

Securency's Asia manager, Ron Marchant, said: "They do other things too. If we would like to have a meeting in the state bank or a meeting in the printing works, we just ask them to go and make the appointments for us, arrange hotel accommodation, collect people from airport, things like that that you generally expect an agent to do."

Mr Marchant claimed Australian diplomatic assistance. "All of our agents we appoint we go through the Australian embassy. We get a list of people who they believe we we can work with in reputable organisations and then we would go through the process of investigating or evaluating them and we make a decisions, and in this case, it was CFTD that we decided to run based on … the recommendation from the Australian embassy and … our own evaluation."

Mr Marchant said he had no dealings with the governor's son and was not familiar with the CFTD subsidiary, Banktech, which the son directed.

But Banktech documents show Securency as one of its "overseas partners" and indicate Banktech was the "exclusive supplier" for Vietnam's polymer banknote project.

The Department of Foreign Affairs and Trade said last night it had assisted Securency's overseas operations and lobbied governments for the company.

Foreign Minister Stephen Smith confirmed that he personally lobbied India, Brazil and Mexico on behalf of Securency due to its strong RBA links.

"On at least one occasion I have made representations on their behalf to have countries contemplate using their expertise in terms of the development of currency," he said.

Mr Smith said he would be happy to detail the representations he had made.

He said the AFP investigation was appropriate following allegations about the company. "That's a matter for the Federal Police and we should await the outcome of their investigation."

The RBA and Treasurer Wayne Swan yesterday declined to answer questions about Securency's use of agents because of the investigation.

Official related to PCI corruption case arrested

The former Director and Deputy Director of the ODA-funded HCM City East-West Avenue and Water Environment Project Management Board were arrested on February 11 for abuse of position and power.

Huynh Ngoc Si was arrested on February 11.

The arrest of Huynh Ngoc Sy and Le Qua, former director and deputy director of the project, produced a stir because it was previously said that the case might be thrown out.

During this Tet, it was rumoured that Sy had gone to Canada for medical treatment though he was banned from leaving Vietnam by the Immigration Management Agency under the Ministry of Public Security.

The case attracts special attention because it has connections to the corruption case of Tokyo-based Pacific Consultants International (PCI) Company. Some officials of PCI were prosecuted and convicted of “graft” and “violating Japan’s competition law”.

This is a big scandal in Japan and Vietnam as well, as it was related to a Vietnamese official, Huynh Ngoc Sy.

On Dec. 8, 2008, in reply to a judicial mandate by the Tokyo Procuracy, the investigative agency launched an investigation into Sy and Qua’s connections to an alleged corruption case involving officials from PCI.

According to the results of the investigation, Sy and Qua abused their positions by renting the East-West Avenue project management board’s office building to PCI and pocketing tens of thousands of US dollars that had been paid in advance by PCI.

On November 19, 2008, Huynh Ngoc Si was suspended from his job. In late December 2008, Japan sent case reports to the Vietnamese Supreme People’s Procuracy.

The case went to trial on December 8.

Si and Qua will remain in custody for four months to serve investigation. According to some sources, Si and Qua will be investigated for leasing part of the office of the East-West Avenue and Water Environment Project Management Board to PCI to earn money and problems related to site clearance and compensation in implementing the above project.

Huynh Ngoc Si, 56, was the Director of the HCM City Volunteer Company from 1995-1999. From 1999 to October 2000, he was the vice chief of the HCM City Volunteer Forces. He then held the position of Deputy Director of the Transport and Director of the East-West Avenue and Water Environment Project beginning in October 2000.

The East-West Avenue has a total length of 21,890km. Its construction was kicked off on January 31, 2005 after nearly eight years for preparation and site clearance. The total investment capital in this work is nearly VND9,864 billion (around US$616.5 million), including VND6,394 billion of ODA capital from the Japan Bank for International Cooperation and the remaining from HCM City’s budget.

The East-West Avenue tops the ten key construction works which have poor quality that were reported to the Prime Minister in 2008 by the State Council for Evaluating Construction Works.

Former Executive of Philadelphia Company Pleads Guilty to Paying Bribes to Vietnamese Officials

A former executive of Philadelphia-based Nexus Technologies Inc. pleaded guilty today in connection with his participation in a conspiracy to bribe Vietnamese government officials in exchange for lucrative contracts to supply equipment and technology to Vietnamese government agencies, in violation of the Foreign Corrupt Practices Act (FCPA).

Joseph T. Lukas, 60, a resident of New Jersey, was a partner in Nexus Technologies Inc. until 2005. According to court documents, Nexus Technologies Inc. was a privately owned export company that identified U.S. vendors for contracts opened for bid by the Vietnamese government to purchase a wide variety of equipment and technology, including underwater mapping equipment, bomb containment equipment, helicopter parts, chemical detectors, satellite communication parts and air tracking systems. Lukas was responsible for overseeing the negotiation of contracts with suppliers in the United States.

In connection with his guilty plea, Lukas admitted that from 1999 to 2005, he and other employees of Nexus Technologies Inc. agreed to pay, and knowingly paid, bribes to Vietnamese government officials in exchange for contracts with the agencies for which the officials worked. The bribes were falsely described as "commissions" in the company’s records.

Lucas was arrested on Sept. 5, 2008, after being indicted by a federal grand jury in Philadelphia on one count of conspiracy to bribe Vietnamese public officials in violation of the FCPA and one substantive count of violating the FCPA. Lukas was indicted on Sept. 4, 2008, along with the company and alleged co-conspirators Nam Nguyen, Kim Nguyen and An Nguyen. Cases are still pending against the remaining defendants and the company.

At sentencing, scheduled for April 6, 2010, Lukas faces a maximum sentence of 10 years in prison.

The case is being prosecuted by Assistant U.S. Attorney Jennifer Arbittier Williams for the Eastern District of Pennsylvania and Trial Attorney Kathleen M. Hamann of the Criminal Division’s Fraud Section. The case was investigated by the FBI and the U.S. Department of Commerce, Office of Export Enforcement.

Siemens: GSM Mobile Network Services in Vietnam

In 2002, Siemens COM paid approximately $140,000 in bribes in connection with a tender worth approximately $35 million for the supply of equipment and services related to a Global Systems mobile network for Vietel, a government owned telecommunications provider founded by the Vietnamese Ministry of Defense. Two separate payments totaling $140,000 were made to the Singapore account of a Siemens business consultant. The payments were then routed through a U.S. correspondent account and likely paid to officials at the Vietnamese Ministry of Defense. The payments were part of a much larger bribery scheme concocted by high-level managers at Siemens regional company in Vietnam, SLV, to pay bribes to government officials at Vietel and the Vietnamese Ministry of Defense in order to acquire Phase I of the Vietel GSM tender.

In a June 2002, facsimile that discussed the bribery scheme, the former head of COM sales for the regional company described Siemens’ explicit agreement to pay 8% of the value of the Vietel project to officials at the Ministry of Defense and 14% of the project value to officials at Vietel. In August and September 2002, Siemens signed agreements with two business consultants who were retained for the sole purpose of funneling the bribes to government officials connected to Vietel. Ultimately, Siemens was unsuccessful in its pursuit of the Vietel project and lost the tender before paying additional bribes.