Vietnam suspends four officials over Japan aid graft allegations

National flags of Vietnam and Japan flutter in the wind in Tokyo's Haneda Airport as Vietnamese President Truong Tan Sang arrived for a visit on March 16, 2014. Both countries have agreed to cooperate in Vietnam's actions to solve the corruption case.

HANOI - Vietnam on Tuesday said it had suspended four railway officials following allegations a Japanese firm paid bribes to win a contract linked to a rail project for Hanoi.

Japan's leading Yomiuri newspaper reported that the head of Japan Transportation Consultants (JTC) admitted his company had paid kickbacks of 130 million yen ($1.3 million) to civil servants in Vietnam, Indonesia and Uzbekistan to win work tied to projects funded by Japan's Official Development Assistance (ODA).

The report said Tamio Kakinuma, 65, told prosecutors in Tokyo last week that among the illicit payments were 80 million yen paid to officials at Vietnam Railways for a project worth 4.2 billion yen.

The scheme was for part of an overground rail link across Hanoi, partially financed by the ODA.

Prosecutors were preparing to launch a criminal probe, the newspaper added, while JTC said it had set up an internal committee to look into the claims.

In response Vietnam's Deputy Minister of Transport Nguyen Ngoc Dong told AFP Tuesday the four senior railway officials "are temporarily suspended from their daily work to concentrate on clarifying their involvement in the project" in Hanoi.

Vietnam and Japan "have agreed to... cooperate in our actions to quickly solve the case", Dong said.

Late Monday, Deputy Prime Minister Nguyen Xuan Phuc also urged "serious punishment" for anyone found guilty, the government's website said.

Japan is Vietnam's largest ODA donor with a pledge of $2.6 billion last year.

In December 2008, Japan suspended ODA to Vietnam for four months during a similar scandal that led to a 20-year jail term for Ho Chi Minh City's transport department's deputy head Huynh Ngoc Sy.

Sy was accused of taking up to $262,000 in 2003 from Tokyo-based Pacific Consultants International company in connection with a major infrastructure project -- a highway linking the east and west of the city -- backed by Japanese aid money.

Vietnam is rated one of the world's most corrupt nations and graft is a top concern for many ordinary Vietnamese.

To defuse public anger over the issue the nation's leadership is desperate to show it is tackling graft.

The one-party state has been rocked by a number of high-profile corruption scandals in recent years, with graft and huge debts at giant state-run companies accused of fuelling the country's economic woes.