[The Economist] NGUYEN DUC KIEN, a Vietnamese banking tycoon and football fanatic, is, say those who know him, a man who likes to get his own way. Take the inconvenient relegation last year of the football team he owned. He simply bought another top-flight team and merged the two. On the evening of August 20th, however, the 48-year-old’s luck ran out. He was arrested at his fancy Hanoi villa and charged with failing to obtain the proper licences for three small investment firms he chairs.
The arrest shocked the country and foreign investors. Mr Kien was one of the Bentley-driving, abalone-munching moguls thought untouchable because of the wealth, power and connections they amassed as the ruling Communist Party followed China’s lead in opening up the economy. Mr Kien co-founded one of Vietnam’s most successful private lenders, Asia Commercial Bank (ACB), whose shareholders include such multinationals as Standard Chartered, a British bank.
In response to his arrest, rumours swirled, the stockmarket tumbled, interbank lending seized up and some ACB depositors withdrew their money. Vietnam’s central bank tried to reassure depositors that Mr Kien’s alleged wrongdoing was not related to ACB and that their money was safe. That same day, however, the central-bank governor, Nguyen Van Binh, reported that the level of bad debts in the banking system was “alarming”—averaging 8.6% of outstanding loans, and as high as 60% at some lenders who now have “no capital at all”.
The optimists among Vietnam’s frustrated foreign investors hope the arrest of Mr Kien is a sign that the party is at last ready to make a serious effort to curb corruption and cronyism, and to tackle deep-seated problems in banks and state-owned enterprises. They point to a recent “self-criticism” drive by Nguyen Phu Trong, the Communist Party leader, and his beefing-up this month of the party’s corruption-fighting powers. But, as Carl Thayer, a Vietnam analyst at the University of New South Wales, points out, it takes more than two swallows to make a summer.