Bribery allegation hits PCI in Vietnam

Scandal-ridden Pacific Consultants International (PCI) is under investigation again over construction work abroad, this time involving suspected bribery for two official development assistance (ODA) projects in Vietnam, sources said Friday.

Japanese prosecutors and Vietnamese investigators have questioned a Vietnamese public servant in Ho Chi Minh City who is suspected of receiving $220,000 (24 million yen) in bribes from PCI, a Tokyo-based construction consulting firm, the sources said.

The money was paid as a reward for helping PCI secure a 3.1-billion-yen contract in a highway construction project and a 1.9-billion-yen contract for a waterworks project, which were both financed by Japan's ODA budget, they said.

The Tokyo District Public Prosecutors Office intends to gain enough evidence to indict PCI executives on charges of violating the Unfair Competition Prevention Law, which bans bribing foreign public servants.

The office plans to increase the number of investigators assigned to the case as early as next week.

Investigators suspect that the bribes were paid to the Vietnamese public servant on two occasions in 2003 and 2006 by a 65-year-old former PCI managing director, who had resigned from the company in 2001.

The former executive was head of PCI's Hong Kong-based affiliate, which was created specifically to provide bribes and kickbacks in Southeast Asia, investigative sources said.

PCI asked the former executive to pay the money apparently because he was retired at the time and would not have been considered a direct link to the company in case the wrongdoing surfaced, according to the sources.

A 58-year-old PCI managing director in charge of accounting has acknowledged that he arranged for the money to be sent to the former executive in Vietnam, knowing that the funds would be used illegally, the sources said.

The managing director was arrested on suspicion of tax evasion and later released.

In June, a special investigation team of the Tokyo prosecutors office asked Hanoi through diplomatic channels to question the Ho Chi Minh City official. The office also dispatched its own investigators to Vietnam.

The PCI scandals have become an embarrassment for the Japanese government. The United States and other countries have asked Japan to crack down on Japanese companies over suspected bribery and other shady practices to win lucrative deals involving ODA projects.

So far, nine PCI executives and others have been arrested, including former President Tamio Araki, 72, who was indicted on charges of aggravated breach of trust.

Former PCI chief Masayoshi Taga, 62, was arrested in May on suspicion of defrauding the government of about 141 million yen in connection with a project to dispose of Japanese chemical weapons abandoned in China at the end of World War II.

Another former PCI president, Shota Morita, 66, was arrested in June on suspicion of corporate tax evasion.

PCI plans to suspend operations and is considering liquidation, company sources said.(IHT/Asahi: July 19,2008)