HANOI - Police have arrested one of Vietnam's richest businessmen as part of an investigation into banking fraud that could deepen investor concerns about the troubled sector.
Ha Van Tham, the former chairman of the private Ocean Bank, was taken into police custody Friday, the State Bank of Vietnam (central bank) said on its website.
It said "serious violations of the laws by Ha Van Tham" were discovered during a probe into a bank restructuring project, leading to his removal from his post and subsequent arrest.
"The State Bank of Vietnam is closely cooperating with relevant authorities to strictly deal with the violations at Ocean Bank under the law," it added without giving further details.
The Ministry of Public Security said Tham had been detained for violating "lending regulations", a crime which reports said carries a jail term of up to 20 years.
The state-run Tuoi Tre newspaper reported that Tham had approved a loan of 500 billion Vietnamese dong (S$30 million) in 2012 to the Trung Dung real estate company without proper collateral.
Trung Dung is likely to default on the loan, Tuoi Tre said. Vietnam has been struggling to clean up bad debts in the banking sector, which have dragged down economic growth.
Bad debts make up some eight per cent of outstanding loans, according to state bank figures, although experts say the real percentage could be far higher.
Tham was chairman of Ocean Group, which has business interests spanning real estate, banking and hotels. It is a key shareholder of the private and unlisted Ocean Bank.
Ocean Group's shares have tumbled on the Ho Chi Minh City Stock Exchange in the last week as rumours of Tham's arrest circulated.
In June this year, the flamboyant billionaire Nguyen Duc Kien - a founder of the Asia Commercial Bank, which counts Standard Chartered as one of its strategic partners - was sentenced to 30 years in prison for fraud, tax evasion, illegal trade and "deliberate wrongdoing causing serious consequences".
He denied the charges against him and his arrest and imprisonment was widely seen by analysts as a result of political infighting between Vietnam's Prime Minister Nguyen Tan Dung and his opponents.
Analysts suggested Tham's arrest could be linked to political manoeuvering ahead of the 2016 Party Congress, when a new prime minister and other top party positions will be announced.