Ethical risk management in business operations of Vietnamese commercial banks

In 2008, Thanh Hai Shipping Company Limited, with Tran Thi Phuong Lien as Director, signed a number of financial leasing contracts for ships with ALC II Company, with a total value of more than 83.8 billion VND. Hoang Thanh Son, an officer of the ALCII Business Department, together with the customer, created a fake set of documents to repair the Thanh Hai 28 ship for Thanh Hai Shipping Company to lease. Afterwards, the subjects withdrew tens of billions of VND to pay off bad debts for the financial leasing contracts. As of March 2013, Thanh Hai Shipping Company still owed ALCII Company nearly 180 billion VND, both principal and interest. According to the indictment, the accomplices were determined to have caused losses to the state of more than 390 billion VND.

16. Mekong Delta Housing Development Bank.

Taking advantage of his position and relationships with customers, Nguyen Huu Quang, former Director of Lap Vo Transaction Office, Mekong Delta Housing Development Bank, Dong Thap Branch, borrowed 67.2 billion VND from 37 people at high interest rates (from 3-12%/month) with the reason of paying off customers' loans. With the trick of borrowing money from the latter to pay the former and at the same time paying a fair portion of the principal and interest, for a long time many lenders trusted him and did not detect Quang's fraudulent behavior, and a total of 47 billion VND was appropriated. At the same time, Quang directed his employees to complete procedures for lending collateral assets of 10 loan customer files, arbitrarily canceling the mortgage and paying the mortgage to customers against regulations. To have money to pay off the debt, Quang directed his staff to create 4 fake loan files and create 3 loan files without having to contact the customers. After approving the loan, Quang lied to the cashier that he was receiving money on behalf of a regular customer. Using this trick, he embezzled nearly 5.1 billion VND.

d. Ethical risks related to accounting, internal spending, and treasury operations

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17. Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank )

From 2010-2011, Director of Vietinbank Tra Vinh, Ngo Cong Binh, along with two deputies Ngo Thi Thanh Van, Lam Hoang Phong and 21 officers in affiliated units, created 658 fake brokerage commission vouchers to embezzle assets, causing a loss of over 2.1 billion VND to the treasury. Mr. Binh directed the creation of fake reward records to withdraw 171 million VND; created contracts, increased the price of invoices for purchasing goods and renting rooms when organizing the handover of 1,000 houses to the poor and buying Tet gifts in 2011 to embezzle nearly 120 million VND; created fake records to buy 50 reward rings.

for units to take over 94 million VND. In addition, in addition to deducting 10% of the salary fund to reward officials with achievements in capital mobilization, causing a loss of over 115 million VND, Mr. Binh was also accused of being involved in inflating the value of moon cake purchase invoices (21.7 million VND) and withdrawing interest from 60 customers' savings cards worth nearly half a billion VND to create new savings cards, causing a loss of tens of millions of VND to the State budget.

18. Mekong Delta Housing Development Joint Stock Commercial Bank

Lam Nguyen Minh Tam (28 years old) worked in the transaction accounting department of Hai Thuong Lan Ong Transaction Office (MHB), with the task of receiving card application files and returning ATM cards to customers. After working for nearly a year, this person secretly and illegally installed remote computer control software via the Internet on the server of this Transaction Office. After knowing the necessary information, in early November 2010, Tam handed over the job to the bank but still kept 5 ATM cards of customers who had received promotional cards but did not come to receive them. After quitting his job, Tam used remote computer management software to install many programs on the server at the transaction office. From here, he learned the names and passwords of the accountants and controllers.

With 2 accounts in hand, Tam easily logged into the banking system's card management program and deposited 5 billion VND into an ATM card account. With accountant access, Tam executed the order to approve this amount into the account. After many times withdrawing > 500 million VND, Tam was arrested by the police and sentenced to 7 years in prison.

19. Kien Long Commercial Joint Stock Bank

On February 21, 2013, the Investigation Police Agency of Bac Lieu Province Police completed the investigation conclusion and transferred the case file to the Provincial People's Procuracy to propose prosecuting Le Anh Duy, former Director of the Transaction Office of Kien Long Commercial Joint Stock Bank in Hong Dan District (Bac Lieu) and 06 other defendants for storing, transporting and circulating counterfeit money. According to the case file, Duy gave the defendants 255 million VND in real money to go to Dong Dang market to buy 500 million VND in counterfeit money. Then, Duy bought 735 square meters of land from a household in Hoa Binh for 900 million VND. When paying 300 million VND, Duy mixed 41 counterfeit bills worth 200,000 VND/bill (equivalent to 8.2 million VND) into the real money to pay.

20. Techcombank

At TechcomBank Go Vap Branch, Ly Chi Nguyen (born in 1981, residing in Ward 14, District 11, Ho Chi Minh City), an employee in the ATM fund management team, repeatedly withdrew money from 05 ATMs under his management. With the task of checking the remaining money every day and suggesting the cashier to withdraw money to replenish the ATM fund, after sorting the money with other employees, placing it in trays and sealing it, while waiting for the vehicle to take him to the ATM fund, he arbitrarily unlocked the money tray, took many 500,000 VND bills, hid them and marked them on his phone to deal with bank inspections. The incident was only discovered when the bank inspection team suddenly inspected the ATMs managed by Nguyen and discovered that 900 million VND was missing.

According to the investigation, from December 2012 until his arrest, Nguyen had committed many thefts at ATMs with a total amount of nearly 3.7 billion VND. What is special is that each time he successfully "robbed", Nguyen recorded the symbols on his Iphone 4 so that he could later deal with checks from Techcombank.

21. Bank for Investment and Development of Vietnam (BIDV)

From January 2009 to July 27, 2012, Nguyen Thi Le Dong (former head of treasury management and services department, BIDV Phu Yen branch) did not comply with the principles of financial management and treasury safety; took advantage of the assigned tasks and the laxity of the Treasury Management Board to embezzle 6.7 billion VND from BIDV Phu Yen bank for personal use. After that, BIDV Phu Yen bank inspected and discovered that the treasury was "embezzled" so it reported to the authorities. On August 10, 2012, defendant Dong was arrested.

Also involved in this case are Mr. Nguyen Duy Sinh, former Deputy Director of BIDV Phu Yen branch; Mr. Le Dinh Hiep, former Head of Finance - Accounting Department (BIDV Phu Yen bank) who were assigned to inspect and supervise the treasury but did not fulfill their assigned duties and tasks, allowing defendant Dong to take advantage of and embezzle the fund's money.

APPENDIX 2.2

SURVEY FORM ON ETHICAL RISK MANAGEMENT AT VIETNAMESE COMMERCIAL BANKS

Dear Sir/Madam

Researcher Tran Trung Dung would like to send you a survey on ethical risk management at Vietnamese commercial banks. The purpose of the survey is to assess the current status of ethical risk management, to serve the research and propose the improvement of policies and solutions for ethical risk management.

We look forward to receiving your feedback by answering the questions in this survey. We assure you that the information on the survey will be used for research purposes only.

1. What is your assessment of the current organizational structure of business operations at Vietnamese commercial banks?

Very reasonable

Reasonable

Not reasonable

Very unreasonable

Not interested

2. The duties of the staff at Mr./Ms. Commercial Bank are:

Find customers

Transaction, customer guidance

Complete business profile

Business performance appraisal

Debt Collection

Check and monitor the use of capital

Handling overdue debt

All of the above

Other comments…………………………………………………………

3. How do you evaluate the importance of ethical risk management at commercial banks?

Very unimportant

Not important

Important

Very important

Especially important

4. What is your assessment of the quality of business operations at commercial banks today?

Not interested

Very good

Good

Short

Very low

5. What is your assessment of the current operational risk and ethical risk management process at your bank?

Very unreasonable

Unreasonable

Relatively reasonable

Reasonable

Very reasonable

6. How do you rate the level of compliance with business procedures of staff at your bank?

Very non-compliant

Non-compliance

Relatively compliant

Very compliant

7. Professional skills of bank staff are:

Communication, presentation

Analysis, forecast

Check, monitor

Teamwork

All of the above skills

Other comments……………………………………………………………………………………..

8. At your bank, we evaluate the financial capacity of borrowers based on the following reports:

Audited financial statements

Unaudited financial statements

Tax Authority Report

Report to inspection agencies

Other comments (specify other reports used by the commercial bank)……

9. What is your assessment of the role of the risk management department in managing ethical risks?

Very unimportant

Not important

Important

Quite important

Very important

10. At your bank, how do officers and employees mainly improve their professional qualifications and skills?

Concentrated training

Online training

Self-training

Mentoring at NHTM (coaching and learning from peers)

Other comments……………………………………………………………………………………..

11. How do you evaluate the professional ethics of the staff at your bank?

Not interested

Very good

Good

Not good

Alarming

12. According to you, the professional qualifications and skills of the staff at your bank:

Very poor

Least

Medium

Good

Very good

13. When establishing a relationship (especially in lending), the customer's "moral character" factor is assessed as:

Very unimportant

Not important

Important

Very important

Especially important

14. How do you evaluate the effectiveness of internal control and inspection at your bank?

Not interested

Very ineffective

Inefficient

Effective

Very effective

15. How is internal control and inspection performed at your bank?

Daily live check

Daily remote monitoring

Periodic remote monitoring

Periodic live inspection

Combine the above forms

Other opinions …..

16. The content of internal inspection and control of business activities at Mr./Ms. Commercial Bank is:

Check and monitor compliance with approved business processes and limits

Inspect and monitor high-risk areas to detect risks early.

Mainly checking and monitoring compliance with business processes

Mainly inspect and monitor high-risk areas to detect risks early.

Combine compliance monitoring and risk-based monitoring and supervision.

17. In your opinion, the necessary conditions for an internal control and inspection officer are:

Specialized in internal control and inspection position

Have professional ethics

Experienced and specialized in internal control and audit position

Have professional ethics, experience and expertise in the position of internal control and inspection

Have professional ethics, experience, expertise in internal inspection and control position, able to work independently at high intensity.

18. According to you, how many internal inspection and control staff are there at your bank?

Too little

Little

Enough

Much

Too much

19. According to you, what are the difficulties and challenges of your commercial bank when implementing ethical risk management to approach international practices?

No challenge

Very small challenge

Normal

There is a challenge

The challenge is huge.

Ethical risk management in business operations of Vietnamese commercial banks - 28

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