VietNamNet Bridge – More and more former high-ranking state officials have become employees of commercial banks after their retirement.

A growing tendency

Cao Sy Kiem, who was Governor of the State Bank of Vietnam in 1989-1997, has been appointed as Chair of the Board of Directors of Dong A Bank. Prior to that, he was an independent member of the bank’s Board of Directors. He is now also the Chair of the Vietnam Small and Medium Enterprises.

In late March 2014, a Sacombank shareholder’s meeting elected Kieu Huu Dung as the new Chair of the Board of Directors. Dung had been a Deputy Chair of Sacombank, and independent member of the Board of Directors,

Dung is known as a former high ranking official who spent 22 years working for state management agencies. Before joining Sacombank, Dung worked as the Director of the Banks and Non-bank Credit Institution Department, an arm of the State Bank.

Meanwhile, Nguyen Doan Hung, a prominent name in the finance sector, has been appointed to the post of independent member of the board of directors of Techcombank, one of Vietnam’s largest joint stock banks. Hung was once Director of the State Bank’s Foreign Exchange Department and later served as Vice Chair of the State Securities Commission (SSC). He also spent many years working for the Ministry of Finance.

Kiem, Dung and Hung are not the first state officials to become bank employees. The pioneer in the trend is Tran Xuan Gia, former Minister of Planning and Investment, and former Head of the Prime Ministerial Research Team.Gia began acting as an independent member of ACB’s Board of Directors in 2006, after 40 years as a state official. He held the post of Chair of the bank’s Board of Directors in 2008 until he stepped down in 2012.

The list of the government officials who have joined commercial banks has lengthened. Le Thi Bang Tam, who formerly held the titles of Deputy Minister of Financeand Chair of the State Capital Investment Corporation (SCIC), has been Chair of HD Bank since 2010. Phung Khac Ke, former Deputy Governor of the State Bank, has become an independent member of VP Bank’s Board of Directors.

High-ranking officials help polish banks’ images?

A banking expert said that in accordance with principles of modern corporate governance, at least a half of the members of companies’ boards of directors should be independent. Under the Vietnamese law, there must be at least two independent members in a bank’s boards of directors.

The presence of the independent members aims to protect the benefits of shareholders, especially small shareholders.

However, the expert said, in many cases, the independent members are just “puppet members of boards of directors”. Since they don’t hold the banks’ shares, they cannot be a decisive voice in issues relating to the banks’ operation.

“You just show up at the office every day and receive a salary at the end of the month,” the expert said, explaining that banks hire the independent board members primarily to satisfy the legal requirements imposed by the watchdog agency.

“Therefore, they are called the high-ranking hired hands,” he said.

TBKTSG