Detecting and Addressing Fraud in FDI Companies in Vietnam: Lessons from Real-World Cases

In FDI companies in Vietnam, language barriers, the abuse of power by certain individuals, and lax management practices have led to a series of fraudulent activities across various departments. This article shares several notable cases of fraud, demonstrating the consequences when individuals cause significant losses in a short period, while also highlighting the challenges in managing and supervising fraudulent activities.

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1. High-Value Fraud at Sanyo Vietnam Co., Ltd.

• Time Period: From July 2008 to April 2009

• Case Details:

  • The Japanese director and his assistant colluded to withdraw funds from both the company’s account and customer receivables, totaling up to USD 7,665,000. This amount was not deposited into the company’s account until the fraudulent activity was uncovered.

• Consequences:

  • The company was not reimbursed because the fraudulent individuals had already spent the funds.

  • The Japanese director was sentenced to life imprisonment.

  • The assistant was sentenced to 12 years in prison.

  
  

2. Fraud in Several FDI Companies

• GN** Co., Ltd.

  • Time Period: From March 2019 to June 2019

  • Case Details: The purchasing staff, the head of the plastic extrusion department, and the warehouse personnel falsified goods receipt records and fabricated payment documents. Consequently, Glonics Vietnam Co., Ltd. transferred payment for non-existent plastic pellets, resulting in losses exceeding 2.1 billion VND.

    
    

• HS** Electronics Co., Ltd.

  • Time Period: From January 2019 to July 2019

  • Case Details: Taking advantage of their responsibilities for dispatching and returning goods, employees colluded to remove items for resale, leading to fraudulent losses amounting to 1.3 billion VND.

    
    

• SS*** Electronics Vietnam – Thai Nguyen.

  • Case 1:

    • Time Period: From February 2020 to April 2020

    • Details:The head of the production department exploited managerial weaknesses to misappropriate 17,880 phone screens, with a total value of 2.4 billion VND.

  • Case 2:

    • Time Period: November 2020

    • Details: The responsible employee, abusing the authority to issue delivery orders, misappropriated 528 display sets and 37 mobile phone screens, valued at over 1.7 billion VND.

      
      

• JR Electronics Co., Ltd.

  • Time Period: From October 2018 to September 2023

  • Case Details: Exploiting her role as an interpreter, Ms. Hien directed employees and directly contacted certain individuals from other companies to inflate whole or parts of invoices for items such as office supplies, labor leasing, electronic equipment, and repairs, resulting in fraudulent losses amounting to 4.7 billion VND.

    
    

Fraudulent Activities That Are Difficult to Detect and Prosecute

Although the aforementioned fraud cases, once detected, could be proven and prosecuted under the law, there still exist large-scale and high-value fraudulent activities that are often overlooked and challenging to substantiate.

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Support Solutions from Our Team

Our team has many years of experience working with foreign-invested companies in Vietnam. We understand the market, the people, and the operational processes of businesses, and we are committed to providing the following solutions:

• Inspection and Monitoring: Implement internal control procedures and a transparent purchasing system to help detect and prevent fraudulent activities at an early stage.

• Training and Human Resource Development: Provide specialized training to help employees understand the importance of integrity and professional ethics, encourage individual accountability, and eliminate fraudulent behaviors.

• Legal Advisory Support: Offer legal advice and support to ensure peace of mind and build trust within the company.

With these comprehensive solutions, we aim to partner with businesses and contribute to creating a safe and sustainable investment environment.

Please contact us immediately to receive further assistance.