Japan's government is asking Vietnam to return the money intended for consultancy work for a Japanese-funded railway project in Hanoi, after the consultant admitted it won the contract through bribery.
Yamamoto Kenichi, representative of Japan International Cooperation Agency (JICA), said at a press briefing in Hanoi Wednesday that the consulting contract signed between Tokyo-based Transportation Consultants (JTC) Inc. and Vietnam Railways has not complied with JICA Procurement Guideline.
JTC has admitted in a trial in Japan last October that it bribed executives at Vietnam’s state-owned railway operator an amount worth US$782,000 to secure the $41-million consultancy contract for the Hanoi Urban Railway Line 1 project.
Due to the violation, Vietnam has to "refund the full amount already disbursed under the said contract," JICA said in a statement Thursday.
Kenichi added that Japan will give further aid when the project has got back on the right track.
The project, part of the first elevated railway in Hanoi, is expected to cost $901.78 million, with 72 percent coming from Japanese aid.
Japan’s Yomiuri newspaper broke the bribery story early last year, prompting investigation both in Japan and Vietnam.
Japanese prosecutors last July pressed charges against JTC and three of its executives for allegedly bribing officials in Vietnam, Indonesia, and Uzbekistan around 160 million yen ($1.58 million) between February 2008 and February 2014 to win contracts for ODA projects.
Vietnam has suspended scores of implicated officials and arrested six people, including Tran Quoc Dong, deputy general director of Vietnam Railways.
Kenichi said JICA will work with Vietnam’s Finance Ministry and Ministry of Investment and Planning to find an independent supervision unit for the project to make sure work goes on efficiently.
The scandal prompted the Japanese government to suspend new ODA funding to Vietnam in early June last year.
But Tokyo resumed all aid in late July on the condition that Vietnam commit to investigating all ODA projects involving JTC and Vietnam Railways and pledge specific measures to stop future graft.
Kenichi called for no more graft case or Japanese people will force their government to stop providing ODA to Vietnam.
The Hanoi railway scandal is the second one since 2008 regarding ODA projects from Vietnam’s top donor Japan.
In December 2008, Japan suspended hundreds of millions of dollars in development loans in Vietnam and only resumed a year later after discovering $262,000 worth of bribes had been paid during an ODA project in Ho Chi Minh City.
Huynh Ngoc Si, former deputy director of the HCMC Transport Department and head of a highway project linking the city’s east and west ends, was convicted of receiving the cash from Japanese Pacific Consultants International executives who were hired to consult on the project.
Si was originally sentenced to life in prison in 2010 but an appeals court in 2011 reduced his term to 20 years.