VietNamNet Bridge – Tran Xuan Gia was recognized by state management agencies as president of Asia Commercial Bank (ACB), but this was on paper only. The real influential figure was Nguyen Duc Kien, dubbed “Mogul Kien”, who has been prosecuted for his economic crimes.

Only when Tran Xuan Gia, Nguyen Duc Kien and several other senior executives of ACB were arrested two years ago did people realize that Gia had been serving only as a so-called “hired president”.

Analysts say there are more and more hired presidents at banks. Vietnamese laws allow a bank to have an “independent chair of board of directors”, or someone who does not hold any shares of the bank.

In most cases, the banks’ real owners manage their banks’ operations, but in other cases, the leading positions are granted to “hired workers” who are former officials of state agencies or ministries.

After two years of working as chair of Sacombank’s board of directors, Pham Huu Phu has resigned and been replaced by Kieu Huu Dung, a well-known name in the banking sector.

Dung spent two years before working as the deputy chair of the bank. And prior to that, Dung was the director of the State Bank’s Department of Banks and Non-bank Credit Institutions.

Dung, who holds the post of Sacombank president, does not hold any Sacombank shares.

And in another case, Cao Sy Kiem, former governor of the State Bank, has become the president of Dong A Bank, while Nguyen Doan Hung, former director of the central bank’s Foreign Exchange Department and former deputy chair of the State Securities Commission, has been appointed to the post of the independent member of Techcombank’s board of directors.

Lawyer Truong Thanh Duc, chair of the BASICO law firm, noted that it is not by chance that bankers hire former high-ranking officials. By doing so, commercial banks can take full advantage of the officials’ image, prestige and relationships.

Duc said the growing tendency of putting former high-ranking officials in the posts of business executives has raised concerns that it could adversely affect the banking system.

“The banks that employ high ranking officials will have advantages over others, which can help them win over their rivals,” Duc explained. “But what will happen if top secrets are disclosed?”

In theory, independent members of the boards of directors are supposed to help protect small shareholders’ benefits. However, Duc said that there was no such independent member in the true sense of the word.

“It is not the small shareholders who get the independent members to protect them. It is the big shareholders who hire the members. Therefore, the hired workers must work for the benefits of those who pay them,” Duc said.

A banking expert, in a talk with Infonet, warned that such “puppet bank leaders” could damage the bank restructuring process.

“During restructuring, banks can replace their presidents or CEOs. But this may not help because the ‘real’ owners of the banks would remain the same and their viewpoints would remain unchanged,” he explained.

Thanh Mai