The Guardian newspaper reported last week that the Tokyo bid team made payments totalling more than $2 million to a Singapore bank account it said was linked to Papa Massata Diack, son of disgraced former international athletics chief Lamine Diack.
Japanese bidding officials said on Friday the payments were legitimate consultant's fees that had been checked by auditors.
Japanese opposition lawmakers raised the issue in parliament on Monday, with questions centring on a Singaporean company called Black Tidings to whose account the Guardian said the payment was made.
The Singapore account where the money was allegedly deposited was controlled by Ian Tan Tong Han, a friend of the younger Diack, the Guardian reported.
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The firm's business address is in a government housing complex in a suburban part of Singapore, and a Reuters cameraman saw shoes and umbrellas in front of the address on Monday morning, but the company has no registered phone number.
"You have indicated that this company has a business record and we absolutely believe that this is not a paper company," former bidding committee president and Japan Olympic Committee president Tsunekazu Takeda told a parliamentary committee.
"Consultants in this industry often are individual business people who, because they are travelling around the world, often use their homes as a business address," he said.
Takeda, a vice president of the Tokyo 2020 Games organisation and an International Olympic Committee (IOC) member, said in a statement on Friday the payments mentioned in the media were paid for services received from Tan's company, a fee that was fully audited by Ernst & Young ShinNihon LLC.
Education and Sports Minister Hiroshi Hase told parliament the consulting company had been needed to gather information and for Tokyo's bidding strategy.
"However, we have been informed that the Tokyo bidding committee could not have been aware of the connection of the company with Lamine Diack," he said.
Diack is under a French police investigation for corruption at the IAAF, athletics' governing body.
The IOC has said it has been in touch with French magistrates.
A spokesman at Singapore's Corrupt Practices Investigation Bureau said it was working with French authorities on the case but declined further comment, citing the investigation.
(Reporting by Elaine Lies in Tokyo, Edgar Su and Fathin Ungku in Singapore; Editing by Robert Birsel)
