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Explainer: What's behind Vietnam's corruption crackdown?

Reuters  |  HANOI 

(Reuters) - brought 22 executives to over losses at the state firm on Monday, in the most important trial of a widening on corruption. Among those being tried was the first politburo member to be arrested in decades.

In a separate trial in Ho Chi Minh City, a banking fraud case began with 46 defendants.

As well as shedding light on graft, mismanagement and nepotism within state firms at a time privatisation is accelerating, the arrests show the ascendancy of a more conservative faction within the ruling

How many people are involved?

Scores have been arrested across and the banking sector. Some have been tried and sentenced already. The most senior figure arrested is former Dinh La Thang, among those whose trial started on Monday. Neither he nor his was available for comment. has accused of kidnapping one suspect, Trinh Xuan Thanh, who was also among the 22 in More than 100 other officials are also under threat of prosecution or have been demoted or fired.

In another case linked to the corruption crackdown, a Vietnamese tycoon was arrested last week after being sent home from

What is

is a tangled enterprise of 15 direct units, 18 subsidiaries and 46 affiliates in which it owns smaller stakes. Hundreds of millions of dollars in losses have been racked up at units ranging from banks to construction firms and power plants to textile mills.

The scandals at are connected to the banking sector through a deal in which the firm lost $35 million in an investment in The lender's former - a previous - was sentenced to death.

What does the mean politically?

It shows a concerted effort to rein in large-scale corruption through which some officials had secured massive personal wealth and tarnished the ruling party's image.

But it has also allowed the current leadership to strengthen its hand under after winning out in a power struggle with former Nguyen last year.

Whether or not the arrests go even higher, Trong's supremacy is assured through a term that lasts until 2021 and the faction is better placed to maintain its dominance even beyond.

What divides the different groups in the ruling party?

Although the party presents a public image of unity, there are diverse views on everything from the pace and openness of reforms to Vietnam's delicate diplomatic balancing between China, the and other powers.

What best characterises the current leadership is conservatism in preserving the party's absolute authority in close alignment with the establishment.

It marks a change of style from the leadership under Dung and his allies, some of whom emerged as personalities in their own right and shown signs of readiness for greater political openness.

Alongside the corruption arrests, has also arrested more bloggers, activists and other critics this year than in any other since a 2011 on youth activists.

How popular is the corruption

Few tears are shed in over the arrests of former officials, but there is also scepticism over the real motives. The day-to-day corruption of low-level officials and police is still a factor of Vietnamese life.

What impact has this had on

PetroVietnam's net profit margin in 2016 was its lowest in at least seven years at just over 7 percent from over 15 percent in 2009. The company told the price was the biggest factor, but it has also said failed projects, wrongdoing by officials and the investigations themselves had an impact.

PetroVietnam's shares are not listed on a stock exchange, but some of its units have underperformed its Thai peer since 2009.

What does this mean for reform and privatisation?

Although the points to the political strengthening of the party, the leadership has shown less sign of delaying economic reform than the previous administration.

Facing pressure because of its budget deficit, the government has accelerated plans to sell major stakes in the most attractive assets - including the sale of a majority stake in late last year. It is also selling stakes in three units of

Some economic and business analysts believe the fear among officials of being branded corrupt could further hold up bureaucratic decision making in state-run firms and ministries.

($1=22,710 dong)

(Editing by Simon Cameron-Moore)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Mon, January 08 2018. 15:51 IST