ABN Amro Holding NV has paid $4.5 million to a state-owned Vietnamese bank to compensate it for losses suffered during disputed foreign-currency trades with the Dutch bank, Vietnamese police said.
The payment apparently was made to speed up the release of four Vietnamese ABN Amro employees who are being detained while police investigate the episode. The payment came after Vietnamese Prime Minister Nguyen Tan Dung intervened in the case earlier this month, advising all parties involved to find a way to resolve the dispute and stating that if ABN Amro compensated Industrial & Commercial Bank of Vietnam, or Incombank, for trading losses, its employees would be released.
The case, which involves more than 500 foreign-exchange transactions between ABN Amro and Incombank, has been embarrassing for Vietnam, which has been trying to attract foreign investment and establish itself as a new player in the global economy. This month, the country hosted a summit of Pacific Rim leaders in Hanoi and was granted approval to join the World Trade Organization.
Police accuse Vietnamese staffers at ABM Amro of illegally trading foreign currencies with an Incombank trader who wasn't authorized to do so over a three-year period. Incombank has said it lost $5.4 million as a result of the trades. The losses were discovered in February, when Vietnam's central bank conducted an audit of Incombank's Haiphong branch. Police later detained an Incombank employee as well as the four ABN Amro staffers.
Throughout the controversy, ABN Amro executives have defended the currency trades and maintained the bank did nothing wrong.
On Friday, police officials said ABN Amro paid $4.5 million to an account at the central bank under the control of the police to partially cover the losses incurred by Incombank in trades placed through ABN Amro and to cover any future claims against the Dutch bank.
On Saturday, an ABN Amro spokeswoman said that 'we've stated in the past that we don't wish to profit from the illegal actions of others,' but declined to comment further.
While Incombank has already dropped a civil case against ABN Amro, a criminal investigation into the disputed trades continues.
As of yesterday evening, four ABN Amro employees were still being detained -- two in prison, two under house arrest. The alleged rogue Incombank trader at the center of the controversy is also still being detained, and could potentially face the death penalty if convicted of losing state assets.
Some other foreign bankers operating in Vietnam, including executives from Citigroup Inc., HSBC Holdings PLC and Societe Generale SA, wrote the Vietnamese banking authorities in September expressing their 'grave concern' over the case. They said the ABN Amro case indicates that nongovernment-owned and foreign banks could be held criminally liable if 'normal' trading transactions result in losses to state-owned banks.
The episode has also strained Vietnam's relations with the Dutch government. And while Vietnam has so far enjoyed a successful year on the international stage -- capped by U.S. President George W. Bush's visit to the Hanoi summit and U.S. semiconductor giant Intel Corp.'s decision to increase its planned investment in the country to $1 billion -- the ABN Amro affair has prompted some investors to privately question whether Vietnam is ready to join the international financial system.
James Hookwayhttp://chinese.wsj.com/gb/20061127/bas100625.asp
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