HANOI - A court in Vietnam sentenced two former executives of a state-owned shipping firm to death on Monday for embezzlement, an unusual harsh sentence in a communist country where prosecutions of top officials are rare.
Duong Chi Dung and Mai Van Phuc, respectively former chairman and chief executive of Vinalines, were found guilty of siphoning off 20 billion dong (S$1.2 million) and mismanaging state funds to the detriment of the country's economy.
In a case that caused losses of $17.3 million (S$21.7 million), eight other officials received sentences of between four and 22 years for embezzlement and "intentionally violating state rules on economic management with serious consequences", according to the verdict read in court.
Dung and Phuc were each ordered to repay $5.2 million (S$6.5 million).
The verdict comes as Vietnam's government seeks to restructure its hundreds of state-owned enterprises (SOEs) in an effort to revive an economy grappling with high levels of bad debt, much of which rests with its own companies.
As part of a plan to create state-owned national champions in the mould of South Korea's "Chaebol", Vietnam wanted to develop Vinalines into one of the world's top shipping companies.
But like many SOEs, which enjoyed almost unfettered access to credit, Vinalines, or Vietnam National Shipping Lines, expanded disastrously into non-core businesses like real estate and stock broking.
It was hit hard by the global economy slowdown from 2008 and ran up debts of $2 billion (S$2.5 billion) by the end of 2011, the government said in a report last year.
The chairman of Vinashin, a debt-ridden, state-owned shipbuilder, was last year jailed for 20 years for violating state regulations on economic management. Vinashin's debts were more than $4 billion (S$5.03 billion).
Prime Minister Nguyen Tan Dung made a public apology in parliament in October 2012 for his "weakness in economic management, especially in the supervision of the operation of state-owned groups."
The Southeast Asian country's economy grew 5.25 per cent in 2012, the slowest pace in 13 years and well below what economists see as its potential.
Despite Vietnam's SOE problems, lawmakers last month approved an amended constitution that affirmed the state sector must "play the leading role" in the economy.
Foreign investors expressed disappointment and said they needed to see more evidence of the government's willingness to reform the inefficient state-owned system and create a level playing field for private sector firms.
"Corruption and conflict of interest issues are embedded in the fabric of the SOE sector. Without addressing fundamental governance issues, progress will remain challenging," said Steven Winkelman, chairman of American Chamber of Commerce in Vietnam.