(Adds comments from Canadian PM, no comment from shareholder)
By Johan Sennero and Daniel Dickson
STOCKHOLM, March 10 (Reuters) - Swedish prosecutors said on Friday they had arrested an employee of Canadian aircraft and train maker Bombardier on suspicion of bribing Azerbaijani officials in a 2013 rail equipment procurement deal.
Prosecutors said a 37-year-old Russian man had been arrested on suspicion of bribery and that several Bombardier employees were suspected of colluding with Azerbaijani officials.
"He denies the accusation," Cristina Bergner, the man's lawyer, told Reuters. She declined to give any further comment.
Prosecutors said they had obtained evidence in the form of emails after a raid at Bombardier in Sweden last October.
"Despite the fact that Bombardier was in fifth place in terms of price, they won the 2013 tender when competitors that had offered a better price were disqualified by the rail authority in Azerbaijan," prosecutors said in a statement.
A Bombardier spokeswoman confirmed an employee had been questioned by police, but declined to give further comment.
"We will cooperate fully with the authorities," Barbara Grimm, Bombardier's head of communication for Railway Control Solutions, said.
Prosecutor Thomas Forsberg told Reuters the contract in question was worth $340 million.
He said one of the rail authority employee's private business became a contracting partner that was offering the tender in a consortium with Bombardier. This Azerbijani company won contracts worth at least $56 million.
A shell company had also bought products for $20 million and then sold them back to the consortium for $104 million, Forsberg said.
Speaking in Texas, Canada's Prime Minister Justin Trudeau said on Friday his government expects Canadian companies to uphold "the highest standards of ethical behaviour".
In Feburary, Canada's Liberal government announced C$372.5 million in repayable loans for two Bombardier jet programs in the Montreal-headquartered company's aerospace division.
"I think it's very clear that this was an entirely separate issue from where we'll be investing in Canada, in the investments Bombardier is making in Canadian aerospace," Trudeau said.
In Montreal, a spokesman for Canada's second largest pension fund, the Caisse de depot et placement du Quebec, which owns a 30 percent stake in Bombardier's transportation division, declined to comment on Friday. (Additional reporting by Olof Swahnberg and Simon Johnson in Stockholm, Allison Lampert in Montreal and Anna Mehler Paperny in Toronto; Editing by Alexander Smith and Elaine Hardcastle)