Vietnamese police Thursday recommended charges against six officials working for the state-owned railway operator for allegedly taking a 69.9 million yen (US$562,000) bribe from a Japanese company while working on an official development assistance-funded railroad project in Hanoi in 2009.
The six, including Tran Quoc Dong, 51, deputy general director of Vietnam Railways, should be charged with "abuse of power", Ministry of Public Security investigators have told the highest prosecutors office, the People's Supreme Procuracy.
It carries a jail term of up to 15 years.
According to police findings, the alleged bribery took place when the company's Railways Project Management Unit (RPMU) was negotiating contract terms with the technical consultant of Hanoi's first urban railway in February 2009.
Pham Hai Bang, 46, then chairman of the project, told executives of Japan Transportation Consultants Inc. (JTC), which led a consultancy joint-venture between Japanese and Vietnamese companies, that his agency was having financial problems.
In response, the Japanese executives offered to help.
Between September that year and February 2014, on Bang's orders, his subordinates Pham Quang Duy, 40, and, Nguyen Nam Thai, 38, received a total of 69.9 million yen from JTC.
The police said Bang managed nearly half of the money and Duy and Thai, the rest.
Dong along with Tran Van Luc, 57, and Nguyen Van Hieu, 53, who was director of RPMU between 2009 and 2014, were allegedly aware of the money but failed to monitor how it was spent.
Bang and his subordinates claimed to have spent it on things like entertaining visiting executives from RPMU's partners and paying bonuses to employees.
Bang told the police that he gifted Dong, Hieu, and Luc VND30 million ($1,300), VND50 million, and VND100 million for Lunar New Year.
None of the expenses were documented, according to the police.
After being arrested in May 2014 Bang surrendered VND970 million ($44,400) and $7,000 in cash and two bank passbooks with nearly VND1 billion ($45,700) in his relatives' names in an effort to reduce the gravity of the crime, the police said.
Scandal after scandal
Vietnamese authorities started investigating the case in March 2014 after Japanese media reported that Tamio Kakinuma, then president of JTC, admitted his company had bribed civil servants in Indonesia, Vietnam, and Uzbekistan between February 2008 and February 2014 to win bids in five ODA projects.
In July last year Japanese prosecutors pressed charges against Kakinuma and two other JTC executives for violating that country's antitrust laws by paying kickbacks estimated at 160 million yen ($1.27 million) in total.
The prosecutors believed that half of the money was paid to Vietnamese officials.
After the scandal broke out, the Japanese government suspended new ODA funding for Vietnam in June 2014, but resumed most of it two months later on the condition that Vietnam investigated all ODA projects involving JTC and Vietnam Railways and pledged specific measures to stop graft in future.
Only the bribery-hit project has not seen funding resume.
In April this year the Japan International Cooperation Agency (JICA) said the Japanese government would not resume funding for the Hanoi railway project until Vietnam returned the bribe money.
In 2008 work began on a 28-kilometer elevated rail route from Yen Vien town in Gia Lam District to Ngoc Hoi in Thanh Tri Commune.
The first stage, slated to be finished in 2017, was projected to cost VND19.46 trillion ($890.82 million), more than 71 percent of which will be funded by Japanese ODA.
By the time the bribery was discovered, the government had signed a loan agreement worth over 4.68 billion yen ($37.66 million) with JICA. The money was meant for technical consultancy and organizing the bidding.
The JTC joint-venture won a bid to become the consultant worth over 2.9 billion yen and VND320 billion (a total of $43.35 million) in 2008.
But due to changes in design, the contract value rose later to over VND3.6 billion yen and VND236 billion (a total of $46.33 million).
In 2008 another senior Vietnamese official was also 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 – also funded by Japanese ODA.
Huynh Ngoc Si, former deputy director of the HCMC transport department and head of the project, was originally sentenced to life in prison in 2010 after being convicted of receiving $262,000 from Pacific Consultants International, a consultant for the highway project.
His sentence was reduced to 20 years on appeal in 2011.
The case had rocked the country, prompting Japan, then Vietnam's biggest donor, to suspend hundreds of millions of dollars in development loans in 2008. Japan resumed ODA a year later.