Vietnam’s Ministry of Public Security on April 29 announced that it had issued an arrest warrant for Ms. Nguyen Thi Thanh Nhan, Chairwoman of the Board of Directors and General Director of Progressive International Joint Stock Company (AIC).
The reason given was that Ms. Nhan’s company was involved in wrongdoings in the procurement of medical equipment in the construction project of Dong Nai General Hospital, causing the state loss of VND152 billion ($6.8 million).
However, according to an article in Haaretz newspaper in Israel by author Yossi Melman published on May 1, the main reason leading to Nguyen Thi Thanh Nhan’s probe was because of arms purchase contracts between Israel and Vietnam in which she acted as an intermediary.
AIC Group, chaired by Ms. Nhan as the chairwoman of the Board of Directors and General Director, is said to have played an active role in connecting arms manufacturers in Israel with the Vietnamese Government over the years.
Notable deals brokered by this company include the $550 million contract to buy spy satellites by the Vietnamese military from Israel’s AIA company.
In an article about the deal on Israel Defense, Nhan was described as an “influential businesswoman.”
Since the beginning of the process of modernizing the military, Vietnam has accelerated the procurement of new weapons to replace its outdated arsenal. According to data from the Stockholm Peace Research Institute, from 1995 to 2021, Vietnam has spent more than $9 billion on buying weapons.
Russia is still the main supplier of weapons to Vietnam, accounting for more than 80% of the proportion of weapons that Vietnam imports. However, in recent years, the Southeast Asian country has made efforts to diversify their arms supply, including Israel, Belarus, and Ukraine.
In Vietnam, military corruption is not a new issue. Most recently, this communist country has arrested seven generals in the Coast Guard at the same time, for allegations of property embezzlement.
The fact that Ms. Nguyen Thi Thanh Nhan was probed is a rare time when the issue of corruption in the procurement of weapons has been noticed.
Talking to Radio Free Asia, Professor Carlyle Thayer, a defense expert in the Asia-Pacific region, said if corrupt information in arms procurement contracts was exposed, the reputation of the Vietnamese military will be severely affected:
“The Vietnamese army is the most respected organization in Vietnam. In the past, my statistics show that in the National Assembly elections, if you look at the distribution of votes, the military is always one of the groups that receive the most votes, in addition, many scientific indicators also show the popularity of this force.
If this really happens, it will have a negative impact on the reputation of the armed forces.”
In 2017, the British defense intelligence agency, Shephard Media, reported that some officials of the Vietnamese military had pleaded with their US partners to pay 25% commissions for contracts to buy weapons and equipment. This attitude caused the meeting between the US and Vietnamese defense officials to be canceled midway. Another source in Singapore told Shephard Media that Vietnamese government officials laundered money through their wives in Singapore.
There is no information on whether the Vietnamese side has organized an investigation into the alleged military officials.
Professor Thayer also said that Russian arms trading companies are known to have high levels of corruption, through activities such as overstating the sale price or demanding the distribution of profits.
However, there is no information on whether or not there is corruption in arms sales contracts between Vietnam and Russia. The reason, according to the Australian professor, is because of the political environment in Vietnam:
“With such a one-party political system in Vietnam, there is no freedom of the press to play a supervisory role, and the audit agency is politicized and controlled by the Communist Party, there is no way to make an independent judgment.”
In addition to the function of protecting national security, the Vietnamese military also participates in many economic fields. The Vietnamese government has repeatedly announced that it will reduce the number of businesses owned by the military, but so far this force still owns more than 100 companies.