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Japan firm pays $780k to win $41m ODA project in Vietnam: paper

Sunday, March 23, 2014, 16:00 GMT+7

The president of a Japanese railway consulting firm has confessed that it had paid over US$780,000 in kickbacks in Vietnam to win an order for a project funded by Japanese official development assistance (ODA) worth more than $41 million, the Yomiuri Shimbun newspaper reported, pointing out a Vietnamese railway official in its March 21 article.

The Japanese newspaper quoted its informed sources as saying that Tamio Kakinuma, the president of Japan Transportation Consultants, Inc. (JTC), admitted allegations that his company had bribed civil servants in Vietnam, Indonesia and Uzbekistan with ¥130 million ($1,271,790) to receive orders for five Japanese ODA-funded projects in these countries.

Kakinuma made the admission when questioned by the special investigation squad of the Tokyo District Public Prosecutors Office on March 18, the paper said, adding he reportedly signed a confession statement.

He purportedly gave details such as when the firm had bribed the civil servants and how much it had paid, the newspaper said.

The president is believed to have explained that he had not known about the situation, according to Yomiuri Shimbun.

The Tokyo Regional Taxation Bureau found illegal payments worth about ¥100 million made by JTC in the course of a tax inspection in 2013, the paper cited its sources as saying.  

JTC was also discovered making further illegal payments worth about ¥30 million, around ¥10 million of which was paid after the tax inspection was conducted in April last year, Yomiuri Shimbun said.

The total illegal payments were made on about 40 occasions from February 2008 to February this year in relation to five ODA projects, it revealed, saying that each payment was determined according to the value of each order.

The projects were related to railway construction design, construction surveillance and other services, with the orders received by joint ventures headed by JTC, the newspaper pointed out.

The paper elaborated that a total of ¥80 million ($782,640) was paid in return for an ODA project order worth ¥4.2 billion ($41,088,600) in Vietnam, while in Indonesia a total of ¥30 million was paid for three projects totaling about ¥2.9 billion.

In Uzbekistan, Yomiuri Shimbun said the firm paid about ¥20 million to win an order worth about ¥700 million.

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, according to the Japanese newspaper.

The Japanese prosecutors will conduct a criminal investigation into charges that the Unfair Competition Prevention Law was violated through payment of bribes to foreign government employees, Yomiuri Shimbun quoted its sources as saying.

Vietnam is examining the allegation

The Vietnamese Ministry of Transport told Tuoi Tre newspaper on Saturday that it had known of the bribery allegation related to the Vietnamese railway sector.

"Ministry leaders have been informed of what the media said,” Nguyen Ngoc Dong, a Deputy Minister of Transport, said. “The Ministry of Transport has requested an examination of relevant agencies.”

The ministry has also asked its bodies to review the time when the alleged bribery took place and those Vietnamese people who were in charge during that time, Dong added.

According to Tuoi Tre’s research, JTC was involved in many infrastructure projects in Vietnam.

In 2005 the company joined hands with consulting firm Pacific Consultants International (PCI) and Japan Railway Technical Service (JARTS) to form a partnership (JTC - PCI - JARTS) in order to provide consulting services to improve safety for bridges and railways on the Hanoi - Ho Chi Minh City route for the Vietnam Railways Corporation.

Under their almost-VND150 billion ($7.1 million) deal with the corporation implemented in 56 months, the JTC - PCI – JARTS partnership supplied such consulting services as surveying, technical design, construction supervision, and infrastructure management capacity improvement to the Vietnam Railways Corporation.

In 2009 JTC, JARTS, and Nippon Koei Co (NK) shook hands with Vietnam's Transport Investment and Construction Consultant Joint Stock Company (TRICC) to propose Vietnam choose Japan's Shinkansen technology to build a high-speed railway in the Southeast Asian nation.

A 20-year jail term following Yomiuri Shimbun reports 

In 2011 a Vietnamese official, Huynh Ngoc Si, was sentenced to two decades in prison for taking bribes from a Japanese company in relation to a project to develop an avenue in Ho Chi Minh City, with funds coming from Japanese ODA, following Yomiuri Shimbun reports.

Yomiuri Shimbun reported on June 25, 2008 that Japan was investigating four former Japanese officials of Japan-based Pacific Consultants International (PCI) for allegedly bribing state government officials in the Southeast Asian region to win ODA project contracts.

PCI was also accused of giving 20 million yen (approximately $200,000) in cash to officials in Vietnam.

Yomiuri Shimbun then published other articles saying that Japan indicted the four PCI former officials for paying kickbacks to Vietnamese officials to win the East - West Avenue (now Vo Van Kiet Avenue) project contract on August 25, 2008.   

The Japanese side then asked Vietnam for cooperation to investigate the scandal.

After receiving the information, the Vietnamese Ministry of Public Security ordered a probe into Si, former deputy director of the HCMC Department of Transport - head of the project management board, and some other people involved in the case.

On October 18, 2010 the Ho Chi Minh City People's Court sentenced Si to life imprisonment on charges of accepting bribes.

Si then appealed against the sentence and an appeals court reduced it to 20 years in prison on September 1, 2011.

JTC was established in 1958 when construction began on the Tokaido Shinkansen line.

Its main shareholders are the two wholly owned subsidiaries of East Japan Railway Co. and Central Japan Railway Co.

The company, which specializes in railway construction design and ground surveying, began expanding overseas in the 1990s. It has received 19 ODA projects totaling ¥25 billion since 2000, including orders it received while participating in joint ventures.

(Yomiuri Shimbun newspaper)

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