Fresh yen-loans and and funding for an ongoing urban railway project have been halted after six Vietnamese railway officials were detained over allegations of corrupt payments, the foreign ministry said in a statement.

The scandal emerged in March when Japanese media reported that the national tax agency had flagged up 100 million yen ($100,000) -worth of payments that could not be properly accounted for.

Japan Transportation Consultants Inc. (JTC) which is involved in several official development aid programmes, is suspected of having paid the money to officials in Vietnam and Uzbekistan and Indonesia, the reports said.

Vietnamese investigators later arrested six people, including Tran Quoc Dong, a deputy general director of Vietnam Railways, reports said.

On Monday, Japan said development aid would be resumed following an investigation in Vietnam, and if measures are put in place to avoid a repeat, a foreign ministry official told AFP.

Japan has also suspended official aid to Uzbekistan over the same case, and is in discussions with Indonesia, the official said.

The suspension of aid from Vietnam's biggest donor country comes as Japan's ties with Vietnam are warming, with Tokyo offering support to Hanoi in its escalating standoff with China over disputed waters.

The relationship-building, spearheaded by Japanese Prime Minister Shinzo Abe, is aimed at forging a regional counterweight to China, which many local actors see as being increasingly aggressive in its various territorial claims.

Agence France Presse - June 3, 2014


Vietnam Railways head demoted for poor performance

The Ministry of Transport announced the demotion of the general director of the state-run Vietnam Railways, Tuesday, citing “sluggish” progress. Nguyen Dat Tuong will continue to serve on the company’s board of directors. When asked to explain about the sudden reshuffle, Transport Minister Dinh La Thang said Tuong had not done his job well.

“As the head of a company that has put out a sluggish performance, he must be replaced and assigned to another job, that’s all,” Thang said. Vu Ta Tung, the general director of Saigon Railways, a subsidiary of Vietnam Railways, will serve as Tuong’s replacement.

Minister Thang said he will continue to punish those responsible for wrongdoing in the railway sector, which was recently implicated in a bribery scandal involving a Japanese company.

The scandal emerged in March, when Japanese media reported that the national tax agency flagged 100 million yen ($100,000) - worth of payments that could not be properly accounted for, AFP reported.

Japan Transportation Consultants Inc. (JTC) which is involved in several official development aid programs, is suspected of having paid the money to officials in Vietnam, Uzbekistan and Indonesia.

Vietnamese investigators later arrested six people, including Tran Quoc Dong, a deputy general director of Vietnam Railways, reports said.

Japan temporarily suspended official development aid to Vietnam on Monday over the bribery case.

Japan said development aid would continue to be disbursed following an investigation in Vietnam and the implementation of measures to prevent any further malfeasance, a foreign ministry official told AFP, the following day.

By Mai Ha - Thanh Nien News - June 03, 2014