ODA and bribery

The special investigation squad of the Tokyo District Public Prosecutors Office has arrested a former president of Pacific Consultants International, a Tokyo-based consultancy for overseas construction projects, and three others on suspicion of bribery in connection with a project in Vietnam financed by the Japanese government’s official development assistance (ODA).

This case, however, may represent only the tip of an iceberg. Suspicions have been raised over collusive ties between Japanese companies and the politicians and officials of countries that receive ODA for infrastructure construction.

PCI had won orders worth ¥3.1 billion for consultation services related to a road construction project carried out by the Ho Chi Minh City People’s Committee, or the city government, and financed by Japanese ODA in October 2001 and March 2003. The PCI former president, Mr. Masayoshi Taga, and three others are suspected of having given $600,000 (about ¥64 million) in December 2003 and $220,000 (about ¥26 million) in August 2006 to the bureau chief of the city government in charge of public works. The total amount of alleged bribes is 1,188 times Vietnam’s per capita gross national income of $690.

But investigators suspect that the $820,000 is only part of the amount that PCI provided to the Ho Chin Minh city official on four occasions from 2003 to 2006. It is also said the PCI side began giving bribes around October 2001.

In 1998, the unfair competition prevention law incorporated a clause banning bribes to public servants of foreign countries. This is the first time the law has been invoked to make arrests in an overseas project financed by ODA. The public prosecutors office should be praised for having overcome obstacles in building a bribery case around a company’s activities abroad.

The government should press countries that receive Japanese ODA to build a mechanism to ensure the transparency of ODA-financed projects. At the same time, Japanese companies should discard the notion that bribes are a necessary cost of doing business in some parts of the world.