Vietnam railway official suspended after Japanese bribery exposure

Thanh Nien News

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A section of Ho Chi Minh City's Vo Van Kiet Highway built with Japan's aid money. In 2011, Huynh Ngoc Si, former  deputy director of Ho Chi Minh City's transport department, was sentenced to 20 years in jail for taking bribes of up to US$262,000 in 2003 from a Tokyo-based company in connection with the highway project. 

The state-owned Vietnam Railways has suspended a senior official shortly after Japanese media carried reports about a Tokyo-based company paying bribes to get ODA (official development assistance) project contracts in Vietnam.

Nguyen Van Hieu, director of the company’s railway projects management unit, has been suspended and ordered to write a report, Vietnam Railways Chairman Tran Ngoc Thanh told Thanh Nien News on Sunday.
The decision was announced at an emergency meeting the company held Sunday following information received about Tokyo-based railway consultant firm Japan Transportation Consultants Inc. (JTC) paying kickbacks of 80 million Japanese yen (US$782,000) to a Vietnamese official to win a contract, Thanh said.

“Other individuals” were also ordered to write reports, he said. Thanh said an internal inspection is being conducted, so they were yet to request a police investigation.

The meeting was held just two days after a Japanese newspaper reported that Tamio Kakinuma, the president of JTC, admitted that the firm had paid kickbacks to foreign civil servants, including a Vietnamese official, in return for orders it received for ODA projects.

“The amount of each payment was determined according to the value of the orders received. For example, a total of 80 million Japanese yen was paid in return for an ODA project order worth 4.2 billion yen in Vietnam,” the Yomiuri Shimbun reported Friday.

According to informed sources, Tamio Kakinuma, the president of Japan Transportation Consultants, Inc. (JTC), confessed to the bribery during questioning by a special investigation squad of the Tokyo District Public Prosecutors Office, the paper said.

It quoted the sources as saying that the prosecutors would launch a criminal probe into charges that kickbacks to foreign government employees were paid in breach of the Unfair Competition Prevention Law.

According to the sources, Kakinuma, 65, admitted during interrogation that JTC had paid money to civil servants in Vietnam, Indonesia and Uzbekistan, giving details of when, how much and to whom.

The president is believed to have explained that he had not known of the situation. The firm’s illegal payments were made on about 40 occasions from February 2008 to February this year, totaling 130 million yen, in relation to orders it received for five ODA projects.

In Indonesia, a total of 30 million yen was paid for three projects totaling about 2.9 billion yen. In Uzbekistan, the firm paid about 20 million yen in return for receiving an order worth about 700 million yen, Yomiuri Shimbun quoted its sources as saying.

The paper said further that the company is believed to have paid the kickbacks to five government employees, including a senior official of an office responsible for project administration at Vietnam Railways and an official in a position of responsibility at the Directorate General of Railways at the Indonesian Transportation Ministry.

JTC has consulted for about 19 railway projects outside Japan since 2000, with a total investment of about 25 billion yen, the Saigon Times has reported. 
The company is a partner in the Vietnam Japan Consulting Joint Venture that carried out a study on the 1,555km north-south railway in 2009. The project, whose cost was estimated at US$55.8 billion, derailed in 2010 as the National Assembly, Vietnam's legislature, dismissed it as economically unsound.

Other partners in this joint venture are the Hanoi-based Transport Investment & Construction Consultant Joint Stock Company, Japan Railway Technical Service and Nippon Koei Company.

This is the second time bribery allegations are being made involving Japanese ODA in Vietnam. A similar case was exposed several years ago, leading to Japan temporarily suspending aid to Vietnam.

In 2008, another senior Vietnamese official was charged with taking bribes in 2003 from a Tokyo-based company in connection with a major infrastructure project -- a highway linking the east and west of Ho Chi Minh City. This project was backed by Japanese ODA as well.

Huynh Ngoc Si, former deputy director of the HCMC's transport department and head of the project, was originally sentenced to life in prison in 2010. Si was found guilty of receiving $262,000 from executives of Pacific Consultants International, or PCI, which was hired as project consultants. 
An appeals court reduced Si’s sentence to 20 years in 2011.

The case rocked the country, prompting Japan, then Vietnam's biggest donor country, to suspend hundreds of millions of dollars in development loans in December 2008. Japan resumed the aid a year later.

 

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