Key words: property declaration; income; corruption prevention and combat.

1. Legal basis

Property and income declaration is one of the important measures of corruption prevention and combat in Vietnam nowadays. This is also one of the rules to codify the UN Convention against Corruption (UNCAC) into internal law. UNCAC assumes proper management of public services and assets, ensuring principles of equity, responsibility and equality before the law, ensuring integrity and encouraging the building of an anti-corruptive culture are basic measures in preventing corruption. On that basis, Chapter II of UNCAC includes provisions on preventive measures for corruption; provisions on preventing corruption in Vietnam are quite compatible with these suggestions.

In Vietnam, the first provision on property declaration was included in the Anti-Corruption Ordinance (Ordinance) in promulgated by the 10th National Assembly’s Standing Committee. Article 14 of the Ordinance stated that “Those who have positions and/or powers have to declare their houses, land, and other assets of high value. The declarations must be accurate and truthful, and declarers are responsible before law in terms of their declarations”. In order to concretize provisions of the Ordinance, the Government promulgated Decree No. 64/1998/ND-CP guiding the implementation of the Ordinance, including property declaration (previous documents had not mentioned income declaration, they had only provided property declaration) and there are also related provisions in the 2005 and 2008 Anti-Corruption Law as well as the forthcoming revised Anti-Corruption Law. Although property declaration has been required since 1998 when the Anti-Corruption Ordinance came into effect, it has been implemented in reality only since 2005, when new Anti-Corruption Laws were passed that additionally required income declaration. Up until now, property and income declaration have been regularly implemented towards those subject to mandatory declaration in agencies, organizations, and units; however, there remain many obstacles in property and income declaration work in terms of both the practical and legal basis over many years, such as property and income declaration provided in legal documents being too simple, general, and inadequate, or declaration work being done mainly for the purpose of coping with formal procedure. Control over property declaration and handling declared properties that seem amiss are issues of controversy in the draft of revised Anti-Corruption Law in recent times.

The implementation of property and income declaration is not only an issue in Vietnam but also in many other countries of the world. The laws of many countries provide different persons who are obliged to make declarations, such as public servants, particularly those who hold leading or managerial roles, who are often obliged to make property and income declarations. Each country also provides different timeframes for property and income declaration, such as before recruitment, promotion, or election, or after recruitment, promotion, election, position movement, end of assigned tasks, or annual declarations.

During the process of completing the current legal basis for property declaration, gaining experience from other countries has practical benefits.

In the USA, any public servant or employee working in the system of executive agencies at positions from grade GS-15 of the General Schedule (which is pay scale of executive service for all public servants) has to publicize their finances, including Vice Assistant Secretary, Officer, Director, and above.

Australian public service is classified into 3 main groups: administrative public service, medium-level management, and high-level management. Only high-level management’s income disclosure is established according to provisions of the Public Service Act. These are professional experts, persons who are capable of policy making and high-level managers that are obliged to make property declaration according to Australian law.

In Singapore, there are no cadres and civil servants except public servants. Public servants are classified into 4 types, and only high-level public servants (Type 1) are obliged to make property declarations.

In Japan, top-level public servants include Vice Director or higher-level officials, such as Assistant to Director General or high-level public servants working at ministerial-level agencies, are obliged to make property declaration.

In Hong Kong, public servants that are obliged to make declarations are classified into 2 grades: Public servants of Grade 1 are appointed as Ministers and members of the Cabinet. Public servants of Grade 2 include assistant officials and secretaries to those of Grade 1, but only managerial officials appointed by the Ministry are obliged to make property declaration.

2. Enhanced declaration of properties and incomes to prevent and fight against corruption

a. As for persons obliged to make declarations

Pursuant to Decree No. 78/2012/ND-CP dated March 17th, 2013 of the Prime Minister on transparency of properties and incomes; Circular No. 08/2013/TT-TTCP dated October 31st, 2013 of the Government’s Inspector - General guiding the implementation of regulations on transparency of properties and incomes, the persons that are obliged to make property and income declaration include:

1. Full-time deputies of the National Assembly, deputies of the People’s Councils, candidates for deputies of the National Assembly and the People’s Councils, potential candidates.

2. Officials holding the position of deputy managers of departments of the People’s Committees of rural districts or higher levels, and persons receiving allowances equivalent to that of such positions in agencies, organizations, and units.

3. Commissioned officers holding the positions of deputy battalion commanders or higher, and persons receiving an allowance equivalent to that of deputy battalion commanders or higher in the People’s Army; commissioned officers holding the  rank of deputy battalion commanders, deputy chiefs of police of wards and townships  or higher; deputy leaders of the police or higher. 

4. Persons holding positions equivalent to deputy managers in hospitals, research institutes, press/magazine agencies, management boards of projects funded by the state, and management boards of the projects funded by ODA.

5. Principals, deputy principals of kindergartens, elementary schools, middle schools, high schools, and regular educational centers; the persons holding positions equivalent to deputy managers or higher in universities, colleges and vocational schools of the state.

6. Members of the Board of Directors, members of the Member Assembly, members of the Control Board, controllers; persons holding managerial positions equivalent to deputy department managers or higher in state-owned enterprises, representatives of State capital or capital of state-owned enterprises; persons holding managerial positions equivalent to deputy department managers in enterprises funded by the State or capital of the State-owned enterprise.

7. Secretaries and Deputy Secretaries of Communist Party Committees, Presidents and Deputy Presidents of the People’s Councils, Presidents and Deputy Presidents of the People’s Committees of communes, wards and townships; Chiefs of Police, Military Chiefs, officials of land registration offices, construction, finance, justice, and citizen registration of communes, wards, and townships.

8. Investigators, prosecutors, verifiers, judges, court clerks, state auditors, inspectors, enforcers, and notary officials.

9. Persons not holding managerial positions in state agencies, Communist Party’s agencies, socio-political organizations, public service providers, units of the People’s Army and the People’ Public Security, but who are in charge of State budget and asset management or directly do the tasks of the agencies, organizations, units, and individuals engaged in the fields stipulated in the List enclosed herewith.

By October 2017 Vietnam’s system of property and income declaration covered 1,116,000 persons on the list of mandatory declarations collected by Party and State agencies, including public servants of all three branches of power and high-level cadres. Compared with the 2.6 million employees working in the public sector and with salaries paid by the Government, it is obvious that the number of persons obliged to make declarations cannot ensure corruption prevention and combat. There should be a wider-ranging provision in the draft of the revised Anti-Corruption Law which states that all cadres and public servants are obliged to make initial property declarations because corruption in Vietnam is small in scale and initial property declaration would be a good solution for corruption prevention and combat. However, there are some difficulties in controlling property and income declarations because relevant agencies would not have enough power and staff to control all property and income declaration forms. Although online declaration solutions were put forward, cadres and public servants working in remote and mountainous areas wouldn’t have enough facilities, such as computers and internet access, to make their declarations.

b. Content of property declarations

Article 3 of Circular No. 08/2013/TT-TTCP dated October 31st 2013 of the Government’s Inspectorate guiding the implementation of provisions on transparency of properties and incomes that are obliged to be declared as follows:

1) Houses and construction works:

a) Houses and other construction works that are issued with Certificates of ownership;

b) Houses and other construction works that have not been issued with Certificates of ownership, or of which the Certificates of ownership are undersigned by other people;

c) Leased houses and other construction works that are under the ownership of the State.

2) Land use rights:

a) Land use rights issued with Certificates of use right;

b) Land use rights that were not issued with Certificate of use right, or of which the Certificates of use right are undersigned by other people;

3) Cash, loans, bank deposits of Vietnamese and foreign organizations and individuals that are worth 50 million VND or more.

4) Overseas properties.

5) Cars, motorcycles, boats, ships and other real estate under the management of the State (which are obliged to be registered and issued certificates of registration) that are worth 50 million VND or more.

6) Precious metals, gems, shares and other valuable papers that are worth 50 million VND or more.

7) The debts payable that are worth 50 million VND or more.

8) Total income in the year.

We believe that properties and incomes that are obliged to be declared are quite adequate and detailed to serve corruption prevention and combat in the past, and certain outcomes have indeed been gained. However, declaration remains formal and some content can still kept vacant, such as business investments, stocks, and shares, which are not being separately declared but are included in the declaration content of precious gems, etc (content No. 6). As for income, probably not all persons obliged to make a declaration are fully aware of the meaning of this term, or they don’t know whether overseas income should be included or not. Thus some incomes end up not being declared, such as gifts, bonuses, money from leased houses, revenues, inheritance, contribution money received, etc. All income should be declared, because if not, declarers could justify their properties by making untruthful declarations of income from the past.

If business investments, stocks, and shares are classified to be declared in a separate line in the declaration form, declarers could see them more easily to make declarations and declaration data could be standardized. Content No. 6 on “precious estates” could be expanded to include any estate, even antiques or oil paintings. Besides, there should be an additional line on expenditures that are not assets but that are till worth more than 50 million VND, such as school fees, expenses for weddings or tourist trips.

In reality, many income transactions are conducted in cash with few records or with inaccessible records. For example, bonuses, mission allowances, and expenses for research projects are paid in cash to employees of the public sector without recorded specific receipts. The elimination of unofficial incomes (such as mandatory bank transactions or recorded payments in cadres and public servants’ profiles in case of inadequate technical conditions for bank transactions) to make archives and increase the effectiveness of controlling property and income declaration.

In addition, declarers should be required to declare properties that they own at least 50% of or at least 25% in legal entities or enterprises, and properties that declarers don’t officially own but can get benefits from; this will prevent additional cheating during declaration. The inclusion of provisions on beneficial owners is in accordance with international standards (Article 46 of Part 1, Section 5-1 of Clause 3 in the 2014 Anti-Corruption Act of Ukraine.

In order to define unexplainable properties during property and income control, there should be information on appropriate money flows (transaction values) for all items. In order to link money flows with each clearly-defined period (according to the fiscal year), there should be declarations of specific dates for each decisive transaction, such as when the loans are paid, how much money is paid, when the property is bought, and how much it is worth, what income from it is, acquired gifts/bonuses/rent money or properties for subjects of intellectual property rights, preferential allowances received as defined by the law towards those having revolutionary merits, inherited properties, contribution payments received, and how long it takes place them.

c. The timing of property and income declaration

Article 9 of Decree No. 78/2013 provides that property and income declaration should be made annually. There hasn’t been any provision for mandatory submission of “initial declaration” on properties that cadres and public servants own at the time they start working at their agencies, which is not appropriate because it is hard to verify which properties they possess before being recruited and which they gain during their time working. Therefore, it is essential to require initial property and income declaration and replace annual declaration with “declaration according to dates” as follows:

Firstly, properties and incomes should be declared upon recruitment into state agencies to become informed about properties owned before recruitment (this policy should be applied to all public servants). This declaration form would be a basis to compare with future declarations, to know about the properties employees own.

Secondly, making annual declarations at a defined time based on a chain of consecutive declarations doesn’t mean that declarers have to make declarations repeatedly on the same information of the same properties and incomes, but only on newly-appearing properties and incomes during that period (fiscal year). Therefore, declaration forms can help declarers complete them easily and facilitate the identification of, and control over, declarations in an effective manner.

Thirdly, making declarations when being appointed, re-appointed, transferred or promoted to a general-level rank in armed forces is very necessary, because the procedure of promotion to the general-level rank is very tight and of great honour. Rank promotion should also be declared, and properties should be identified. It is titles that should be attached, not managerial positions.

Fourthly, there should be output declaration forms on all properties possessed after leaving a position, as control and identification of properties are conducted even when public servants retire but have signals of violating law.

d. Disciplinary actions against persons that make untruthful declarations of properties and incomes or provide improper explanation for their additional properties and incomes

Article 30 of Decree No. 78/2013 provides disciplinary actions against declarers that make property and income declarations or explain the origins of additional properties in an untruthful manner.

Persons that make untruthful declarations of properties and incomes or provide untruthful explanations for their additional properties shall face the disciplinary actions below:

a) A senior official shall incur a reprimand, a warning or dismissal;

b) A public servant shall incur a reprimand, a warning, salary cut, demotion, or dismissal;

c) A civil servant shall incur a reprimand, a warning, or dismissal;

d) A person working in a state-owned enterprise shall incur a reprimand, a warning, or dismissal;

đ) A person working in an agency or unit of the People’s Army or People’s Public Security shall face the disciplinary actions applied to the army and public security.

By now, we only have disciplinary actions against acts of untruthful declaration, and persons that are detected making untruthful declarations of properties can face administrative disciplinary actions, or the Party’s disciplinary actions in different forms, and in reality some people are demoted or dismissed (Decree No. 34/2011/ND-CP providing disciplinary actions against public servants). Until now, however, there are still types of properties that we do not have any provision to deal with. That the draft of Anti-Corruption Law addresses the issue of handling properties is essential to enhance the effectiveness of corruption prevention and combat in accordance with the common international tendency of corruption prevention and combat.

Current law provides that properties obtained by corruption and properties originating illegally (by violation of law or by committing crimes), depending on individual situations, can be criminally penalized or administratively punished by recovery, giving back to owners/legal managers, or confiscation to state funds (Article 4 providing principles of handling corruption as prescribed at the integrated Paper No. 10/VBHN-VPQH dated December 12th, 2012 named Integrated Paper on Anti-Corruption Law of the National Assembly’s Office). Until now there haven’t been any provisions on disciplining properties and incomes that have suspect origins but where violations of the law and corruption cannot be proved by the State. Despite this, properties with origins that cannot be explained cannot be implicitly considered as corrupted properties to be recovered, we don’t want to move towards “assuming a crime was committed”.

In the context of revised 2018 Anti-Corruption Law, Article 59 of the drafted Law provides a tax rate of 45% for incomes from mandatory declarers who made untruthful declarations or could not explain reasonably increased properties and incomes about their origins (reasonably-unexplainable properties).

In our country, people in families have a tradition of saving and accumulation and of giving and inheriting properties to and between each other. Therefore, properties of cadres and public servants originate from many different sources (in addition to incomes from salaries, many people do extra jobs to increase their incomes in many different forms, or they have inherited/been given properties) and as the State is not able to control the income of the whole society, current law does not have provisions on making people prove the origin of their money to buy properties, especially hugely valuable properties; provisions on taxing properties. Nevertheless, if we consider properties and incomes with origins that public servants can’t prove allowed to become properties of the State, and we establish State ownership rights according to civil proceedings, this would be inconsistent with provisions of the Civil Code on the bases of establishing ownership rights; at the same time it is difficult to implement the task of proving obligations of the persons that represent the State to sue.

As for properties and incomes that mandatory declarers couldn’t make reasonable declarations about their origins but that the State is not able to prove their illegal origins, the principle of “assumption of innocence” has to be applied, and this can be considered as generated incomes that declarers haven’t paid taxes upon and that collecting taxes from these properties is appropriate in the current situation. As for the tax rate, it should be according to the rate of 45%. This tax collection idea, however, could accidently encourage corruption because corrupted properties after paying taxes will become legal at 55% their initial value. We think that reasonably-unexplainable properties and incomes should be handled and confiscated to the State fund if competent agencies can prove them to be obtained from corruption and the committing of crimes. If origins cannot be explained but misdeeds cannot be proven we have to assume the person to be innocent and consider the properties legal. And, legal properties have to be taxed according to the framework of Individual Income Tax Law, not at the rate of 45%. As for untruthful declarers and persons that explain increased properties about their origins in an unreasonable manner, it depends on each case as to if to apply criminal measures, civil measures, or punishments.

Nowadays, the effectiveness of detecting corruption in property and income declaration is not high because of only relying on self-declaration of cadres and public servants. “They barely make declarations of what is legal, explainable, and legitimate. No corrupted properties are declared”. Control and identification can only be conducted based on what is in the declaration form. If there is no authorization to expand investigation and identification of their major children and blood brothers and sisters, it will be very difficult. Therefore, it is necessary to focus on concrete provisions on procedures and processes of property and income explanation and identification. Effective property and income declaration is becoming an essential requirement in the course of corruption prevention and combat in our country today.

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l References:

1. Dr. Tilman Hoppe: Report on property declaration, good international practices at the Round-table Conference on Property Declaration in Vietnam.

2. Dr. Tilman Hoppe: Property recovery in South East Asia, National Report-Vietnam at the Round-table Conference on Property Declaration in Vietnam.

3. Hong Vi: Anti-corruption measures in China, the National Publishing House of Politics, 2014.

4. Government’s Inspectorate: Some issues on corruption and increasing effectiveness of corruption prevention and combat in Vietnam, Labour Publishing House, 2012.

5. Anti-Corruption Law (2012).

6. Decree No. 37/2007/ND-CP dated March 9th, 2007 of the Government on transparency of properties and incomes.

7. Decree No. 68/2011/ND-CP dated August 8th, 2011 of the Government on amendment and supplement to some articles of Decree No. 37/2007/ND-CP.

8. Circular No. 08/2013/TT-TTCP dated October 31st, 2013 of the Government’s Inspectorate guiding the implementation of provisions on transparency properties and incomes.

9. Decree No. 78/2013/ND-CP dated July 17th, 2013 of the Government on transparency of properties and incomes.

10. Instruction No. 33-CT/TW dated January 3rd, 2014 of the Politburo on enhancing the leadership of the Party towards property declaration and control over property declaration.

11. The official website of the Government’s Inspectorate

Assoc. Prof., Dr. Tang Thi Thu Trang

Institute for State and Law,

Ho Chi Minh National Academy of Politics