By James Pearson (LON:PSON)
HANOI (Reuters) - A court has upheld a key judgment in Vietnam's biggest-ever fraud case, a victim's lawyer told Reuters, in a trial that has spotlighted the country's ability to tackle financial crime at a time when foreign banks are heeding government calls to invest.
The Ho Chi Minh City People's High Court ruled on Wednesday to uphold a judgment that the central perpetrator of a 4.9 trillion dong ($215 million) theft is responsible for returning some of the stolen money, rather than the individual's employer at the time, state-controlled VietinBank (HM:CTG).
The ruling comes as financial firms such as investment banks and global buyout funds flock to Vietnam, hoping to capitalize on a period of privatization and capital-raising deals in the fast-growing emerging Southeast Asian economy.
The chief executive of one victim, depositor Saigonbank Berjaya Securities JSC (SBBS) - a unit of Malaysia's Berjaya Corporation Bhd (KL:BGRO) - also confirmed Wednesday's verdict.
Josephine Yei told Reuters earlier that if the ruling was upheld, she had little hope of recouping her bank's $10 million from the perpetrator, who was sentenced to life imprisonment.
"I am heartbroken and lost of words now," Yei told Reuters after the ruling.
VietinBank, formally Vietnam Joint Stock Commercial Bank for Industry and Trade, did not respond to an emailed request for comment. A VietinBank lawyer told Reuters the bank had instructed its lawyers not to comment to media.
Majority owner State Bank of Vietnam - the country's central bank - could not provide immediate comment.
In many economies, banks can be liable for embezzlement of depositors' funds if negligence of the bank is established. In Vietnam, interpretation of liability law becomes more open when the perpetrator goes beyond their responsibility, a lawyer said.
"Different understandings lead to different decisions," said Nguyen Thanh Ha, chairman of Hanoi-based SBLAW, ahead of the ruling. "Vietnam doesn't have case laws for such cases so it depends completely on the mind of the jury."
Court documents showed indebted Huynh Thi Huyen Nhu and 22 accomplices were convicted in 2014 for "misappropriation of funds" from 15 victims in 2010 and 2011.
SBBS lawyer Nguyen Thi Minh Huyen told Reuters after the ruling that as acting head of the transaction office of VietinBank, Nhu's actions should mean the bank shares responsibility.
Both domestic and foreign investors have been watching the case closely to "see how the legal framework protecting depositors in Vietnam is being implemented," said Huyen.
"I don't agree with this verdict. It is not fair and does not consider the true nature of the case."
Credit-ratings firm Fitch earlier this month upgraded its Long-Term Issuer Default Rating of VietinBank to B+ from BB-, along with two other state-owned Vietnamese banks.