A single decision can make or break an executive’s career, but in Vietnam, it can also land them in prison. With increasing crackdowns on corporate misconduct, business leaders are now facing a legal landscape where ignorance is no excuse and negligence can lead to prosecution. Many business leaders assume that criminal liability falls solely on the company, but under Vietnamese law, directors, CEOs, and senior managers can face personal prosecution for corporate misconduct. As authorities intensify enforcement efforts against white-collar crimes such as fraud, tax evasion, and corruption, it is crucial for corporate executives to understand the risks and how to mitigate them.

This article outlines when corporate leaders can be held criminally liable, what legal consequences they face, and how business leaders can protect themselves from prosecution.

Understanding Corporate Criminal Liability in Vietnam

Vietnam’s Penal Code (Law No. 100/2015/QH13, amended in 2017) provides that both companies and individuals can be held criminally liable for corporate crimes. Executives can face direct prosecution if they were involved in or failed to prevent illegal business activities.

Under Vietnamese law, corporate leaders may be charged for offenses such as:

• Fraudulent business practices (Article 198)
• Tax evasion (Article 200)
• Bribery and corruption (Articles 354, 364)
• Embezzlement (Article 353)
• Money laundering (Article 324)
• Securities fraud and insider trading (Article 210)

When Can a Corporate Executive Be Prosecuted?

Executives may face criminal charges in Vietnam when their actions, or lack of oversight, contribute to corporate misconduct. Vietnamese law holds company leaders accountable not only for direct violations but also for failures in governance and compliance.

• Direct Involvement: Executives who personally authorize, commit, or assist in illegal activities, such as fraudulent transactions or financial misrepresentation, can be charged directly under Vietnam’s Penal Code.
• Negligence & Failure to Supervise: Corporate leaders have a legal duty to ensure that compliance measures are in place. If their inaction allows subordinates to engage in fraud, bribery, or regulatory breaches, they can be held responsible for failing to prevent misconduct.
• Vicarious Liability: Even if an executive did not personally commit an offense, they can still be prosecuted if they were in a position to detect and stop the illegal activity but failed to take action.
• Failure to Report Crimes: Under Vietnamese law, executives must report any criminal activity occurring within their organization. A failure to do so can result in complicity charges, significantly increasing the legal risks for leadership teams.

Executives may also face liability for corporate culture failures, where systemic non-compliance or unethical business practices are found to be prevalent under their leadership. This has led to increased scrutiny from authorities, particularly in sectors such as banking, real estate, and large-scale investment projects.

Example Case:

• In 2023, a Vietnamese CEO was sentenced to 10 years in prison for signing off on fraudulent financial reports, even though the CFO executed the scheme. The court ruled that the CEO’s failure to perform due diligence and his role in approving falsified documents made him equally responsible for the crime.

As Vietnam strengthens its corporate governance laws, executives must take a more active role in ensuring compliance, implementing robust internal controls, and fostering a culture of transparency to reduce legal risks.

Legal Consequences for Executives Facing Prosecution

Executives found guilty of corporate crimes in Vietnam face severe penalties:

• Imprisonment: Sentences range from 2 to 20 years, depending on the crime’s severity.
• Fines: Up to VND 5 billion (approximately USD 200,000) or a percentage of corporate earnings.
• Asset Seizure: Authorities can freeze and confiscate personal assets if linked to criminal activity.
• Travel Bans & Extradition: Foreign executives may face travel restrictions or extradition under Vietnam’s international legal agreements.
• Corporate Sanctions: The company itself may face suspension, license revocation, or dissolution as a result of the executive’s actions.

Preventative Measures: How Executives Can Protect Themselves

Executives must take proactive steps to minimize their risk of criminal liability, particularly as enforcement efforts in Vietnam intensify. Ensuring legal compliance at every level of business operations is essential.

1. Implement Strong Compliance Programs – Companies must establish clear compliance frameworks, conduct regular internal audits, and enforce policies that actively prevent fraud, bribery, and other corporate crimes. Having a dedicated compliance officer or legal team can significantly reduce risks.
2. Conduct Legal Due Diligence – Executives should thoroughly review all contracts, financial reports, and major business transactions before signing off. Engaging in legal due diligence ensures that transactions comply with Vietnamese corporate laws and international standards.
3. Strengthen Corporate Governance and Internal Controls – A well-structured governance framework, including transparent financial reporting, independent board oversight, and ethics training, helps protect executives from vicarious liability.
4. Whistleblower Protection and Internal Reporting Systems – Encouraging employees to report wrongdoing internally through secure and anonymous channels can help companies detect and address issues before they escalate to criminal investigations.
5. Director & Officer (D&O) Liability Insurance – Executives should consider D&O insurance coverage to safeguard their personal assets against potential legal claims and financial damages arising from lawsuits related to corporate misconduct.
6. Engage Legal Counsel Early – Having experienced corporate criminal defense lawyers on retainer ensures that executives have immediate legal representation if they are accused of wrongdoing. Seeking early legal advice can also help navigate regulatory investigations and negotiate settlements before charges escalate.

The Role of Legal Defense in Executive Prosecution

When a corporate executive becomes the target of a criminal investigation, the legal strategy adopted can significantly impact the outcome. Authorities in Vietnam take an aggressive stance on corporate misconduct, and executives must act swiftly to protect their rights.

1. Immediate Legal Representation: Engaging experienced defense counsel at the earliest stage is critical. Legal experts can help executives navigate interrogation procedures, assess potential charges, and develop a defense strategy that minimizes legal exposure. Providing statements to authorities without legal guidance can result in self-incrimination.

2. Building a Strong Defense: A well-prepared legal team can challenge the validity of evidence, identify procedural violations, and leverage mitigating factors. For instance, if an executive was not directly involved in wrongdoing, their legal team can present evidence that demonstrates a lack of intent or reliance on internal compliance structures.

3. Negotiating Plea Deals and Settlement Strategies: In cases where conviction is likely, legal experts can negotiate plea agreements that reduce sentences, lower financial penalties, or even avoid imprisonment. Executives may also explore corporate settlements to resolve allegations without formal criminal charges.

4. Cross-Border Legal Considerations: Foreign executives operating in Vietnam must be aware of extradition risks and international legal cooperation treaties. Vietnam has agreements with several countries to extradite individuals facing serious charges, making international defense strategies essential.

By working closely with top-tier defense attorneys, executives can significantly improve their chances of securing a favorable outcome while maintaining their professional integrity.

Conclusion

As regulatory scrutiny tightens in Vietnam, corporate executives face an increasingly complex legal landscape where accountability is rigorously enforced. To safeguard their professional standing and mitigate potential legal risks, business leaders must implement proactive compliance strategies and engage with experienced legal counsel.

Le & Tran is widely recognized for its excellence in corporate and criminal defense, recommended by AmCham Vietnam, the US Consulate, and consistently top-ranked in Chambers, Legal500, and Benchmark Litigation. Whether you need assistance in corporate compliance, regulatory defense, or white-collar crime investigations, our criminal defense lawyers provide tailored legal strategies to assist corporate leaders and organizations in navigating complex legal challenges. Contact us today at info@letranlaw.com.