Japan’s Shimizu admits to rigging maglev bids

Japan’s Shimizu admits to rigging maglev bids

Two “super general contractors” have admitted to bid-rigging for contracts on the magnetic levitation high-speed train line, but two other construction companies in the suspected ring have denied all allegations of collusion.

Executives of Obayashi Corp. and Shimizu Corp. have told the Tokyo District Public Prosecutors Office that all four companies fixed the bidding system to divvy up construction projects among themselves on the maglev train line, known as Linear Chuo Shinkansen Line.

The executives have also apparently admitted to same violations of the Anti-Monopoly Law to the Fair Trade Commission (FTC).

Under the FTC’s leniency policy, the four companies had until Jan. 22 to come clean to escape administrative monetary penalties.

However, Kajima Corp. and Taisei Corp. continue to deny any wrongdoing, and they plan to dispute the allegations with the FTC and the prosecutors office.

Under the Anti-Monopoly Law, the first company that admits to suspicions before the start of the FTC’s mandatory investigation can escape all penalties and criminal procedures.

Even after the FTC investigation starts, up to three companies can avoid 30 percent of the penalties.

The planned Linear Chuo Shinkansen Line is a hugely expensive project that will link Tokyo with Nagoya, and later Osaka, using trains that will be among the fastest in the world.

According to sources, executives of Kajima and Taisei have told prosecutors that employees of the four super general contractors did discuss construction projects for the line.

But the executives insist that Kajima and Taisei never engaged in bid-rigging acts, such as coordinating efforts so that all four companies would win orders equally.

They have also said Central Japan Railway Co. (JR Tokai), which is planning the construction of the line, played a big role in deciding the winner of each order.

Moreover, they said, some of the four companies failed to win contracts that they seriously wanted, showing that collusion did not exist among the firms.

The bid-rigging scandal surfaced after prosecutors searched the offices of Obayashi for evidence on Dec. 8, 2017.

After Obayashi implicated the other three companies, prosecutors and the FTC searched the offices of all four companies on Dec. 18 and 19.

Based on explanations provided by Obayashi and Shimizu, prosecutors also plan to question smaller construction companies that formed joint ventures with the four or won orders for other projects by themselves.

According to several sources, the four major companies started discussing how to divvy up the projects even before JR Tokai announced the route of the maglev train line in 2011.

A vice president of Obayashi told prosecutors that executives of the four companies agreed on coordination methods around 2014, when JR Tokai decided on details of the construction projects, the sources said.

Prosecutors have apparently obtained documents that Obayashi worked out for its employees, showing which of the four companies would win which construction project.

Prosecutors have focused on three projects mentioned in the documents.

One project concerned work at Shinagawa Station in Tokyo, the planned starting point for the maglev train line in the capital.

A joint venture led by Obayashi won the order for the south construction area of Shinagawa Station in 2015, while a joint venture headed by Shimizu was awarded the contract for the north construction area the same year.

Another project was for construction of the Meijo emergency exit in Nagoya. An Obayashi-led joint venture was awarded that contract in 2016.

The third project, for the central west construction area at Nagoya Station, was won by an Obayashi-headed joint venture in 2016.

Executives of Kajima and Taisei have disputed the comments and information attributed to Obayashi.

According to Kajima, talks were held among the four companies, but Kajima dispatched a low-ranking department chief while the other three firms sent board members.

Kajima said its representative did not have the power nor the authority to decide which construction projects the company wanted to win.

“This department head may have conveyed to the other firms that Kajima would not aim to win orders for certain projects. But we never conducted coordination to win orders,” a Kajima official said.

The sources also said the Obayashi vice president asked Kajima to let Obayashi win the construction project for the Meijo emergency exit.

“We received a request from Obayashi,” the Kajima official said. “But we took part in the bidding with our own price. Therefore, we were not involved in any unfair practices.”

Taisei also said that it hoped to win the construction project at Nagoya Station, but JR Tokai’s intentions were for the order to go to Obayashi.

“If bid-rigging existed, we would have been able to win the order,” a Taisei official said.

Obayashi on Jan. 23 announced that its president, Toru Shiraishi, 70, will resign on March 1. He will be replaced by Kenji Hasuwa, 64, a director at the company.

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