Railway officials to stand trial in bribery scandal linked to Japan-funded project

Local media reported on October 9 that the officials from Vietnam Railways' projects management unit RPMU have been charged with "power abuse," a crime punishable by a 15-year jail term.

The two-day trial will start in Hanoi on October 26.

According to the indictment, the officials started receiving the money from Japan Transportation Consultants Inc. (JTC) in September 2009, after they signed a contract on technical consultancy for Hanoi's first urban railway.

Pham Hai Bang, 46, the then manager of the project and deputy chief of RPMU, allegedly told JTC's management that his unit was having financial problems.

The Japanese company reportedly offered to give him money.

A railway on Long Bien Bridge that crosses the Red River in Hanoi. Part of the capital city's first urban railway, which has been suspended since last year over a bribery scandal, is designed to run parallel with the bridge. Photo: Ngoc Thang

By the time the case was busted in February 2014, a total of JPY69.9 million had been sent to Bang and two other officials, Pham Quang Duy and Nguyen Nam Thai, prosecutors said.

The money was then used for both official and personal purposes, including entertainment expenses for partners, according to prosecutors.

Tran Quoc Dong, 51, Tran Van Luc, 57, and Nguyen Van Hieu, 53, who acted as chiefs of RPMU between 2009 and 2014, allegedly received VND30-VND100 million (US$1,300-US$4,400) each from Bang as "Lunar New Year gifts."

After being arrested last year, all the former chiefs returned the money they had received. Duy and Thai submitted VND65 million and VND600 million (US$2,800-US$26,500), respectively, in an apparent effort to reduce the gravity of their crime.

Bang also surrendered VND970 million (US$42,900) and US$7,000 in cash and two bank passbooks with nearly VND1 billion (US$44,200) in his relatives' names.

Vietnamese authorities started investigating the case after Japanese media reported early last year 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 (official development assistance) projects.

In July last year, Japanese prosecutors pressed charges against Kakinuma and two other JTC executives for violating antitrust laws by paying kickbacks estimated at JPY160 million (US$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 the same year. It resumed most of the funding two months later on the condition that Vietnam investigated all Japanese-funded projects involving JTC and Vietnam Railways and took stronger anti-graft measures.

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 money they disbursed for the consultancy service.

Responding to the demand, Vietnamese transport ministry said it will review the contract to estimate how much it was. 

Local media reported that by the time the bribery was discovered, Vietnamese government had signed a loan agreement worth over JPY4.68 billion (US$37.66 million) with JICA to fund technical consultancy work and bidding procedures, according to the reports.

JTC and its partners won the consultancy contract worth over JPY2.9 billion and VND320 billion (a total of US$43.35 million) in 2008.

But due to changes in design, the contract value rose later to over JPY3.6 billion and VND236 billion (a total of US$46.33 million).

Japan was supposed to fund 71% of the project's first stage, expected to cost VND19.46 trillion (US$890.82 million) and finish in 2017.

Funding problems are likely to affect the deadline.