A large number of victims attended the court hearing in HCM City on August 27. — VNA/VNS Photo

HCM CITY — A HCM City court has sentenced two former property executives to lengthy prison terms and ordered several banks to return land-use right certificates to residents in one of Việt Nam’s most high-profile real estate fraud cases that has exposed deep flaws in banking oversight.

The HCM City People’s Court on Wednesday handed life imprisonment to Lưu Quang Lãm, 66, former chairman of Đại Hải Company, for fraud and appropriation of assets.

His successor, Ngô Xuân Trường, 50, was given 14 years in prison for abuse of trust to misappropriate property.

The court found that the executives illegally mortgaged at least 115 plots of land at the Hiệp Bình Chánh Residential Project in former Thủ Đức City (part of HCM City), despite the plots having already been sold.

The fraudulent collateral was used to secure more than VNĐ208 billion (US$8.3 million) in loans for affiliated companies.

Judges ruled that banks must return the disputed certificates to Đại Hải, which will be required to work with local authorities to issue proper land-use rights for residents who have lived on the land for years without official ownership papers.

If the company fails to comply, residents can directly request certification from government offices.

The ruling followed years of protests by hundreds of families who bought plots in the 58,000-square-metre project launched in 2001.

Many households built homes and lived there for over a decade but were left without legal ownership documents after their land was secretly pledged to banks.

Some were unable to register addresses or enroll their children in school, while others fell into mounting debt after borrowing to purchase land that remained uncertified.

The court also recommended further investigation into the lending practices of banks that accepted already-sold land as collateral, citing possible violations of credit regulations.

The scandal adds to growing concerns about weak governance in Việt Nam’s financial sector.

Over the past decade, multiple banking executives have been jailed in connection with bad loans and illegal collateralisation, exposing systemic problems in risk management and regulatory enforcement.

Analysts say lax credit supervision, cozy ties between lenders and developers, and opaque ownership structures have fueled overlapping crises in both the real estate and banking sectors.

Việt Nam’s property market, once a magnet for speculative investment, has slowed sharply in recent years under the weight of fraud cases, tighter credit conditions, and unfinished projects, leaving thousands of homebuyers trapped in legal disputes similar to the Hiệp Bình Chánh case. — VNS