Japan presses bribery charges against execs in Vietnam graft scandal

By An Dien, Thanh Nien News

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Workers bundle reclaimed materials by the train tracks in Hanoi. Three Japanese execs are facing charges for allegedly bribing Vietnamese railway officials to win work tied to projects funded by Japanese aid. Photo credit: Bloomberg Workers bundle reclaimed materials by the train tracks in Hanoi. Three Japanese execs are facing charges for allegedly bribing Vietnamese railway officials to win work tied to projects funded by Japanese aid. Photo credit: Bloomberg

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Both the railway scandal and the suspension of aid won't affect Japan’s desire to enlist Vietnam in its campaign to counter China, analysts say
Japanese prosecutors on Thursday pressed charges against a Tokyo-based consultancy company and three of its executives for allegedly bribing Vietnamese officials to win contracts funded by Japanese official development assistance (ODA).
Japan’s Kyodo News reported that the suspects, including Tamio Kakinuma, 65 -- the former president of Japan Transportation Consultants Inc. -- were charged with providing tens of millions of Yen to officials of Vietnam Railways, the state-owned railway monopoly.
Kyodo News cited a report released in April by JTC’s outside panel of lawyers announcing that JTC had paid around 160 million Yen (US$1.58 million) in kickbacks to officials in Vietnam, Indonesia, and Uzbekistan between February 2008 and February of this year.
In Vietnam alone, the officials involved allegedly received 80 million Yen ($782,000) for a Japan-funded urban highway project worth 4.2 billion Yen in Hanoi.
Vietnam has suspended scores of implicated officials and arrested six people, including Tran Quoc Dong, deputy general director of Vietnam Railways. Despite the crackdown Japan suspended new ODA loans early last month and funding for the Hanoi highway project.
Given that the case is already making its way through the justice system, analysts believe that the government's filing of charges is just the next step. But they expect that Japanese aid will soon resume since the stoppage will affect companies in Japan and come under political pressure.
“I believe Japan decided it must take some serious action to be able to point to in the face of criticism at home and potentially from other donors given that scandal,” Edward Feasel, an expert at Soka University of America who has studied Japanese ODA to Vietnam, told Thanh Nien News.
But “it is unlikely Japan will suspend aid in any serious form or length of time given that Vietnam is one of its most important aid partners and models of success,” he said.
In 2008 Huynh Ngoc Si -- the former deputy director of the Ho Chi Minh City's transport department and head of a major Japanese ODA-backed highway project -- was convicted of receiving $262,000 in 2003 from executives at Pacific Consultants International, which was hired as the project consultant.
The case forced Japan to suspend hundreds of millions of dollars in development loans in December 2008. But Tokyo resumed the aid four months later.
Japan has consistently ranked as Vietnam's largest source of ODA, churning out around $20 billion worth of ODA to Vietnam between 1993 and 2012. 
Last March, Tokyo announced that its aid to Hanoi this year would be no less than the 200 billion yen (US$1.94 billion) it provided in 2013.
“Japanese ODA has both an altruistic motive and, of course, benefits for Japan. The latter is both about enhancing commercial opportunities for Japanese business and increasing the international standing of Japan as one of the leading donor nations,” Feasel said.
Geopolitical trump
The suspension of Japanese aid came at a time when Tokyo was looking to ramp up economic and defense support for Hanoi against the backdrop of rising tensions between China and Vietnam in the East Sea, internationally known as the South China Sea.
China’s deployment of a US$-1billion oil rig into Vietnamese waters in May has sparked ongoing confrontations between vessels near the rig, leading to a number of attacks and collisions.
Japan, which is itself locked in a maritime territorial dispute with China, is preparing an extensive aid package for Vietnam's project to build patrol ships, Eto Akinori, President of the Japanese House of Representatives Committee on Security, said during a visit to Vietnam on July 7.
Japanese Foreign Minister Fumio Kishida is set to visit Vietnam later this month to enlist the Southeast Asian country’s support for its cabinet’s decision to reinterpret the country's pacifist Constitution to allow Japan's use of the right of collective self-defense, Kyodo News quoted government sources as saying.
China, which suffered under Japan's wartime brutality, has bristled at the change in Japanese security policy, while the US and its allies -- Australia and the Philippines -- have thrown their support behind it.
“China has gone into overdrive in the past few weeks focusing on Japanese aggression in World War II,” said Zachary Abuza, a Washington-based Asia analyst. “It has been a torrent out of Beijing. China will be lobbying Southeast Asian states very hard for them to reject it.”
It is obvious that Japan is trying to win as many friends as possible to counter, and perhaps isolate China, analysts say.
“Japan's actions are understandable, since all claimant countries suffer from Chinese assertiveness,” said Yun Sun, a China security policy expert with the Stimson Center, a Washington-based think tank.
“But then certainly, such ‘alignment’ of positions is perceived as hostility by China.”

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