In Vietnam, it has become known as the company that moves with 'centipede legs'. But despite that label, Nguyen Trung Truc, the managing director of Peregrine subsidiary Peregrine Capital Vietnam, and his wife Deidre Low cannot leave Ho Chi Minh City. They face charges of evading taxes on the import of 80 cars and Truc's older sister has been detained by police in relation to the same charges, state newspapers reported. Officials say the investigation into Peregrine's distribution network that links a string of foreign brands to a string of local 'nominee' companies is the largest ever concerning a foreign investor. More charges may follow with investigations possibly continuing for as long as four months. When inspection officials paid a visit to Peregrine's Ho Chi Minh City offices in late May, Truc dismissed it as 'routine'. At that point, Truc was one of Vietnam's most prominent foreign investors, highly regarded for a wide range of business and government contacts with more than a modicum of public relations savvy. In April last year, his company captured Vietnam's first 'investment advisory licence', which inside sources claim give it far more rights than increased restrictive representative office approval. Two months on, Vietnam's state media have taken the gloves off and all manner of allegations - both personal and professional - have appeared in a string of detailed articles. Among the most recent was one which appeared in the powerful Communist Party daily, Nhan Dan. The newspaper, more than any other, is the ideological compass of Vietnam's ruling elite and rarely delves into such investment detail. Unsurprisingly then, Peregrine's predicament is this summer dominating talk among Vietnam's wary band of foreign investors, all of whom are now desperate for any clues to the inclination of the government and are intent on following the recent party congress marked by conservative rhetoric but little sign of firm change. The questions they ask are whether Peregrine has flouted regulations or merely offended any one of a host of delicate local sensibilities. Will any prosecution be transparent and fair? What is Peregrine's future here and what is the over-riding message for everyone else? When it comes to local sensitivities, several question marks loom. Firstly, Truc, an Australian-Vietnamese who takes pleasure in collecting vintage cars and has a widely known penchant for a certain Ho Chi Minh City night-spot, Rootz, is one of the most colourful of the thousands of recent investment returnees. While overseas Vietnamese were once, as an obvious cultural bridge, much sought-after by foreign firms, many returnees now feel vulnerable to an increasingly suspicious Hanoi, despite laws giving them apparent protection in business. In addition, there is the distribution business - traditionally a no-go zone for foreigners looking for a direct role. Hanoi is desperately keen to safeguard its markets through a strict system of import licences and large state trading conglomerates. Any perceived off-shore domination through local shell companies has been firmly dealt with several times in the past. Peregrine Vietnam represents a host of lines, many exclusively, ranging from Mercedes and Honda cars to Allied Domecq liquors. Peregrine's technique of securing networks through tying local firms into nominee contracts is widely known, and has been avoided by several foreign firms that instead only deal with state companies to avoid a perceived legal 'grey area'. The Nhan Dan quoted from internal documents between Truc and Hong Kong in which he claimed control over key trademarks in key industries. It then asked how such monopolies could be established in Vietnam. As foreign analysts, investors and diplomats wait for answers, many are hoping the final result will show Vietnam is determined to make itself a more lawful place to do business. Certainly Vietnam's leaders have made clear they have the law on their mind. When asked during the recent congress how to make life easier for the investors they sought to lure, the answer from General Secretary Do Muoi and underlings was cryptic but always the same. 'Foreign investors are welcome,' they said. 'So long as they obey our laws.'
