Tokyo – A Japanese contractor allegedly paid at least 40 million yen (340,000 dollars) in kickbacks to cronies of former Indonesian president Suharto and related ministries to get a railway contract, a report said Thursday.

Tekken Corp. paid the money between 1988 and 1990 to the Udinda firm that acted as the Japanese firm's mediator in attempts to get the Jakarta railway deal, the Yomiuri Shimbun said.

Former Tekken officials said they were told kickbacks to Suharto associates and high-ranking officials would be needed to win the contract, the daily said.

An Udinda official told the Yomiuri Shimbun that the company gave 80 percent of the kickbacks to Indonesia's state secretariat, national development and planning agency, transport ministry and others.

"I believe part of kickbacks to the state secretariat was diverted to Suharto's associates," the Udinda official was quoted as saying.

Although Tekken claimed the payment was for mediation fees, Tokyo regional tax authorities determined it was used to gain favor in the award of contracts.

Tekken won contracts valued at 4.63 billion yen in connection with the railway construction between 1988 and 1990. The construction, although being awarded by the Indonesian government, was funded by Japan's official development assistance, the daily said.

It is believed Japanese companies routinely provided kickbacks to Suharto cronies in connection with official development assistance projects, it said.

Previously, Japanese companies found to have given payments to foreign government officials could not be punished under domestic law.

However, after the Organization for Economic Cooperation and Development ratified a treaty to prevent bribes to public servants in foreign countries, the government has revised the Unfair Competition Prevention Law to enable prosecution.