Kajima bribed Indonesian tax officials, report says

Kajima bribed Indonesian tax officials, report says

TOKYO (AFP): Major Japanese contractor Kajima Corp. paid 80 million yen (US$660,000) in suspected illegal bribes to Indonesian tax authorities, a report said Wednesday.

"Kajima made questionable payments to local tax authorities so they would underestimate the company's taxable income," the Yomiuri Shimbun said, citing Tokyo tax authority sources.

Kajima accepted it made the payments but said they were made to settle tax claims.

"It is true that we gave money to the Indonesian authorities to settle tax negotiations but I cannot confirm the amount of money involved," a spokesman said.

Japanese tax authorities ordered Kajima to pay an extra 40 million yen in additional taxes, including punitive taxes for the Indonesian payments, the paper said.

The payments suggested deep-rooted corruption by the Indonesian tax authorities and their collusion with Japanese construction firms, the paper said. Such payments were routine for Japanese firms working in the country.

Other Japanese constructors have also been implicated in suspected illegal payments to Indonesia.

Kajima won 21 construction contracts in Indonesia between 1994 and 1997 worth a total 22 billion yen, the paper said.

The contractor has warned it is facing worse-than-expected earnings in the past financial year to March because of poor profits at subsidiaries.

Kajima predicts a heavy group net loss of 200 billion yen, on sales of 1,650 billion yen.