Inspectors find Vietnamese central bank guilty for Incombank losses

The State Bank of Vietnam was to blame for $5.4 million in foreign exchange trading losses at the state-run Industrial and Commercial Bank of Vietnam (Incombank) last year, according to local government inspectors.

The government report, posted on the official Vietnam News Agency website, found the central bank's lack of proper regulation on interbank foreign currency trading led to losses incurred by Incombank. The audit goes on to say the central bank had failed to tighten supervision of the interbank currency market.

The official announcement ends investigations that began in March last year, when a deputy head of trade financing at Incombank was arrested for allegedly losing $5.4 million in a series of speculative currency deals with foreign banks, including ABN Amro.

Two local ABN Amro staff were detained in prison and another two were placed under house arrest. Incombank sued the Dutch bank for the return of the $5.4 million last August. Although ABN Amro consistently denied fault for Incombank's losses, the case was eventually settled when ABN Amro paid $4.5 million in November. Sources say the two imprisoned ABN Amro staff members' detention was commuted to house arrest at the end of last year. ABN Amro declined to comment.