VZCZCXRO3549
PP RUEHCHI RUEHDT
DE RUEHHM #0268/01 0821049
ZNR UUUUU ZZH
P 231049Z MAR 07
FM AMCONSUL HO CHI MINH CITY
TO RUEHC/SECSTATE WASHDC PRIORITY 2254
INFO RUEHHI/AMEMBASSY HANOI PRIORITY 1615
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHGV/USMISSION GENEVA 0033
RUEHHM/AMCONSUL HO CHI MINH CITY 2434

UNCLAS SECTION 01 OF 03 HO CHI MINH CITY 000268 
 
SIPDIS 
 
USDOC 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS AND EB/TPP/BTA/ANA 
STATE PASS USTR DAVID BISBEE 
USDOC FOR OTEXA 
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO 
TREASURY FOR OASIA 
GENEVA FOR USTR 
 
E.O. 12958: N/A 
TAGS: ETRD ECON KTEX WTRO VM
SUBJECT: FORMER TRADE MINISTRY OFFICIALS SENTENCED FOR ROLE IN U.S. 
QUOTA SCAM 
 
REF: 05 HANOI 01 B) 04 HANOI 2752 C) 04 HANOI 2620 
 
HO CHI MIN 00000268  001.2 OF 003 
 
 
¶1. (U) Sensitive But Unclassified. Not for Internet 
distribution. 
 
¶2. (SBU) Summary:  A Ho Chi Minh City court March 23 
sentenced former Vice Minister of Trade Mai Van Dau to 14 
years in prison for accepting bribes from apparel companies 
in exchange for quota for garment exports to the United 
States.  Dau and 13 others were convicted in the quota 
scam, in which apparel manufacturers used middlemen to pay 
Ministry of Trade (MOT) officials thousands of dollars in 
exchange for U.S. textile quota in 2003 and 2004.  The 
court also recommended that government prosecutors 
investigate additional allegations of bribe receiving in 
connection with illegal U.S. quota transactions by Dau and 
other MOT officials.  Dau's sentence was a strong statement 
on government corruption on the part of the Government of 
Vietnam (GVN).  The trial also illustrated how the flawed 
nature of GVN's quota allocation system created an 
environment where corruption could flourish.  In a rare 
move, HCMC authorities permitted EconOff to attend the 
trial, which afforded some insights into the Vietnamese 
judicial system.  End Summary. 
 
Background 
---------- 
 
¶3. (U) From March 13-23, the Ho Chi Minh City Supreme 
People's Court heard the corruption trial involving Mai Van 
Dau, former Vice Minister of Trade; Le Van Thang, former 
Deputy Director of MOT's Export-Import Department; Nguyen 
Cuong, former Director of the HCMC Department of Trade; Mai 
Thanh Hai, former MOT official and son of former Vice 
Minister Dau; and ten other businesspeople, including a 
Taiwan national.  The accused were charged with such crimes 
as bribery, bribe receiving, bribe facilitation, abuse of 
power, and falsifying documents.  The court sentenced Dau, 
age 65, to 14 years in prison; Thang, age 53, to 17 years 
imprisonment; Cuong, age 62, to 12 years imprisonment; and 
Hai to 5 years incarceration.  The sentences of the other 
defendants ranged from one to eight years in prison.  Dau, 
Thang, and Cuong were also fined USD 5,900, USD 21,700, and 
USD 156,000, respectively.  All of the charges related to 
the illegal sale of U.S. textile quota during 2003 and 
2004, when Vietnam was still subject to quota under the 
terms of the U.S.-Vietnam Bilateral Textile Agreement.  The 
court also recommended that government prosecutors conduct 
additional investigations of bribe receiving on the part of 
Dau and Thang for their roles in additional instances of 
illegal U.S. quota transactions. 
 
¶4. (U) Dau was convicted of receiving USD 6,000 in bribes, 
a charge that carried a maximum penalty of life in prison. 
His son, Hai, was accused of "cheating," a lesser charge 
than bribe receiving, and he was charged with falsifying 
his credentials.  Hai falsely claimed he had received a 
Bachelor's degree in order to obtain his position at the 
MOT.  Thang was convicted of receiving USD 18,000 in 
bribes.  Cuong was convicted of helping businesspeople pass 
USD 38,000 in bribes to MOT officials Dau and Thang.  The 
businessmen and women who were Dau and Thang's co- 
defendants all claimed to have paid the two officials tens 
of thousands of dollars more in bribes than prosecutors 
charged.  Trial testimony revealed that Dau signed a 
statement during the police investigation admitting to 
receiving less money than his co-conspirators alleged, and 
it was these statements that formed the basis of the 
official charges. 
 
Trial Testimony 
--------------- 
 
¶5. (SBU) The testimony of the defendants at the trial 
revealed how the scam worked and provided insights into 
deficiencies of the GVN's quota allocation system.  In one 
scenario, bribe facilitators would bring businesspeople 
needing quota to Dau's home.  The businesspeople would show 
 
HO CHI MIN 00000268  002.2 OF 003 
 
 
Dau their applications for quota, and he would make a 
notation on the applications.  The notations would signal 
Thang - who was directly responsible for allocating quota - 
that the applicants should receive quota.  The bribes were 
then passed along via the facilitators or enclosed in gifts 
of fruit or clothing. 
 
¶6. (SBU) One defendant, Ms. Tran Thu Lan, admitted to 
giving Thang bribes of USD 1,000 to 2,000 on 17 different 
occasions when she submitted her applications for quota. 
(Note: Lan was sentenced to five years in prison. End 
note.) Lan worked for the A Chau Company, which eventually 
blew the whistle on the scam after failing to receive quota 
for which it had bribed Dau and Thang.  Lan tearfully 
described being trapped between contract commitments to 
U.S. buyers and the GVN quota allocation system.  Under the 
system, the MOT required companies to obtain contracts for 
apparel destined for the U.S. market before the MOT would 
grant quota.  Lan testified that she and representatives 
from other companies were frequently faced with the dilemma 
of having contracts to provide apparel to U.S. buyers, but 
not having the quota that would allow the apparel into the 
U.S. market.  On a number of occasions, Lan said she had 
applied for the quota, but the MOT had not responded to her 
applications.  Desperate to avoid the financial penalties 
of missing contracted deadlines, Lan agreed to pay bribes 
in order to receive the quota and not break her contracts. 
Lan testified that she and her company were being sued in 
civil court for USD 2 million by a U.S. company (NFI) for 
failing to meet contract obligations. 
 
¶7. (SBU) Mai Van Dau, in his testimony, recanted the 
statement he had given authorities in which he admitted to 
receiving USD 6,000.  He told the judges he had signed the 
statement because he had fallen sick while in police 
custody, and investigators had told him that if he signed 
the statement he would be released.  Dau complained that 
even though he signed the statement he was not released. 
He said in court that he had not received any bribes and 
that the notations he made on the applications he was given 
in his home were simply notations he was in the habit of 
making on all his work-related documents.  Judges asked Dau 
how he could have allowed the MOT to hire his son, Hai, 
knowing Hai did not have the university degree his job 
required.  Dau responded that he did not realize Hai had 
not completed his degree.  The judge noted that as Dau had 
only two sons, it should not be difficult to remember who 
had a degree and who did not. 
 
Inside a Vietnamese courtroom 
----------------------------- 
 
¶8. (SBU) HCMC authorities, rather unusually, permitted 
EconOff to attend the trial.  (Note:  Previous requests by 
ConGenOffs to attend trials not involving U.S. citizens 
have almost always been refused.  End note.)  EconOff 
attended sessions that included the reading of the 
indictment, questioning of defendants by judges and 
lawyers, and closing statements by defense attorneys.  This 
trial was heard by two judges and three "jurors," who sit 
with the judges and who are permitted to question the 
defendants.  The jurors are not full-time employees of the 
court, but are professionals in other fields, including 
government service, who are chosen based on their abilities 
and political ties.  Two representatives of the Supreme 
People's Procuracy - the prosecutors - read the indictment, 
questioned the defendants and made a closing argument that 
included sentencing recommendations. (Note:  The sentences 
received by the defendants were generally harsher than the 
recommendations made by the prosecutors.  End note.) 
Defense attorneys sat in the audience behind the 
defendants, who sat on backless wooden benches in the 
center of the court.  Five of the defendants, including 
Dau, Thang, Hai, and Cuong, were still in police custody, 
so they each sat with a police guard. 
 
¶9. (SBU) The reading of the indictment, which lasted 
 
HO CHI MIN 00000268  003.2 OF 003 
 
 
several hours, laid out the details of the GVN's case 
against the 14 defendants, including a lengthy listing of 
all the occasions when conspirators met and bribes were 
paid.  The centerpiece of the trial was the questioning of 
the defendants.  The judges, jurors, prosecutors and then 
defense attorneys were all allowed to question each of the 
defendants.  No witnesses were called, and no physical 
evidence was presented.  Testimony was followed by three 
days of closing arguments made by the prosecutors and the 
defense attorneys.  On March 23, the judges issued their 
decision and announced the sentences.  As the sentences 
were being read, photographers mobbed the defendants, 
particularly Dau, climbing onto the judges' stage to get 
photos of the defendants. 
 
Comment 
------- 
 
¶10. (SBU) The severity of the sentences indicates the GVN 
wanted to make an example of Dau and his MOT co- 
conspirators and to show that Vietnam does not take 
government corruption lightly.  This was a relatively 
painless way for the GVN to highlight its anti-corruption 
efforts: Dau and his colleagues have been out of government 
service (and in police custody) since 2004, and the quota 
system no longer exists, following Vietnam's accession to 
the World Trade Organization.  The fact that the government 
officials in this case received heavier sentences than the 
businesspeople who bribed them contrasts with another 
recent corruption case making headlines in HCMC.  In this 
case, involving land corruption, a bribe giver was 
sentenced to death, while the local officials she paid off 
received lengthy prison sentences. 
 
¶11. (SBU) The trial also threw into sharp relief the 
inadequacies of the GVN system to allocate U.S. apparel 
quota.  Throughout the life of the bilateral textile 
agreement, U.S. industry representatives reported that the 
quota allocation system used by the GVN was inefficient and 
encouraged corruption.  U.S. buyers also tell us the GVN 
could have designed the quota allocation system so that 
companies were not placed in the tough position of having 
products under contract that needed to be sent to the 
United States, but not having the necessary quota.  The 
GVN's failure to design a better system was a contributing 
factor to the corruption in this case. 
WINNICK