In 2022, Vietnamese authorities brought charges against two principal shareholders of Tan Hoang Minh and Van Thinh Phat for the crime of fraud (Tội lừa đảo) under Article 174 of the Penal Code 2015. Newspaper reports suggest that the relevant individuals have undertaken fraudulent activities in issuing corporate bonds and appropriate the bond issuance proceeds from bondholders. However, to prove that an individual commits a crime of fraud, the authorities would need to produce more evidence to support their cases.

Article 174 of the Penal Code 2015 imposes criminal liability to an individual who appropriates others’ properties by fraudulent means. Based on comments from reputable scholars (link 1, and link 2), the crime of fraud has the following characteristics:

• Only individuals could be convicted of the crime of fraud. Companies cannot be convicted of this crime. Accordingly, the entities issuing corporate bonds in the above cases cannot be convicted of the crime of fraud;

• The criminal must have the intention to appropriate properties of other persons. To appropriate a property, the criminal must obtain all three elements of ownership right including right of possession, right to use and right to dispose the property. If the criminal only obtains one or two elements of ownership right then it is not a crime of fraud. In a similar provision, the Penal Code 2015 applies criminal liabilities to a person who borrows monies from other but, among other things, does not repay when the loan is due even though such person has the capacity to repay the loan. This provision suggests that if the loan is not due yet then the act of appropriation might not have occurred. Accordingly, if the bond issued by the relevant issuing entities are not due yet then it is not clear if the bond proceeds can be treated as being appropriated by the relevant individuals;