Japan told the Vietnamese government Monday it would suspend official development assistance over bribery allegations surrounding a Japan-funded Hanoi urban railway project, the embassy in Hanoi said.
Specifically, loans for the first phase of constructing the project's No. 1 railway line will be frozen, the embassy said.
It said the message was conveyed during a bilateral progress meeting, after six Vietnamese railway officials were detained in May over a contract awarded to Tokyo-based Japan Transportation Consultants Inc.
The Japanese side said it would resume the aid when Hanoi investigates whether or not JTC or state-owned Vietnam Railways Corp. broke the law, and demanded that Vietnam take steps to prevent a recurrence, the embassy said.
It added that the two sides would meet again late this month, when the Japanese side will consider resuming assistance after studying the outcome of Vietnam's investigation and any measures it is taking.
JTC said in April that an independent panel found it had paid ¥160 million in kickbacks to officials involved in projects in Vietnam, Indonesia, Uzbekistan between 2009 and 2014. Its payments to secure an aid project in Vietnam were estimated at ¥66 million.
The six Vietnamese officials arrested include Tran Quoc Dong, a deputy general director of Vietnam Railways. Vietnamese authorities are investigating the matter.