A Vietnamese official denied Tuesday that Japan has suspended all Official Development Aid (ODA) to Vietnam after learning of bribes paid to secure the contract on an ongoing urban railway project in Hanoi.
Japan will still maintain its non-refundable aid as well as technical assistance for ODA projects in Vietnam; it will just temporarily suspend funding allocated to the project directly implicated in the bribery scandal, said Nguyen Xuan Tien,
deputy director of the Ministry of Planning and Investment’s Department for Foreign Economic Relations, during a press briefing.
The scandal emerged in March when Japanese media reported that the national tax agency had flagged 100 million yen (US$100,000) worth of payments that could not be properly accounted for.
Officials from the Japan Transportation Consultants Inc. (JTC) was suspected of having paid the money to officials in Vietnam and Uzbekistan and Indonesia to secure contracts for ODA projects, the reports said.
Vietnamese investigators later arrested six people, including Tran Quoc Dong, a deputy general director of the state-run Vietnam Railways, reports said.
Japan will consider approving new ODA projects if Vietnam pledges to strictly punish those involved in the bribery scandal and if measures are put into place to prevent future graft, Tien told the press Tuesday.
“Japan will not stop funding all ODA projects; they've just stopped disbursing part of the $1 billion in ODA loans they pledged to Vietnam this year.
“I confirm that it is just the small portion of the funds which directly pertain to this case.”
Tien said Vietnamese and Japanese representatives will meet again this month to discuss punishment for those involved in the irregularities and institute measures to avoid similar acts, thus to pave the way for a resumption of the project.
The Ministry of Planning and Investment said it will establish a process to inspect ODA projects and amend some laws such as the Investment Law and the Business Law as well as to issue a new law on bidding in the near future.
The National Assembly, the country’s parliament, is working on the Law on Public Investment as part of an effort to avoid corruption related to ODA projects.
Japanese officials notified their Vietnamese counterparts that Tokyo will suspend loans for the first phase of railway line No. 1 of the Hanoi urban railway project during a bilateral meeting on Monday, Japan’s Kyodo News reported.
As conditions for resuming ODA, Tokyo required that Hanoi probe whether there was anything illicit regarding contracts involving the Vietnam Railways Corp. or JTC, and to draw up measures to prevent a recurrence, the report said.
The two parties agreed to meet again late this month at which time the Japanese will review the Vietnamese investigation and mitigation efforts and determine whether to resume funding the project.
In 2012, Denmark suspended aid for three climate-change research projects in Vietnam due to reports of fraud.
In 2008, a 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 – also backed by Japanese ODA.
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 convicted of receiving $262,000 from executives of Pacific Consultants International, or PCI, which was hired as a consultant on the project.
An appeal reduced his 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.
Like us on Facebook and scroll down to share your comment