Cheating: Nothing new

February 14, 2015

Corporations suspected of rigging bids for pavement projects since before 3/11

http://mainichi.jp/english/english/newsselect/news/20150214p2a00m0na012000c.html

Corporations suspected of banding together to rig bids for pavement projects in the aftermath of the Great East Japan Earthquake of March 2011 are strongly suspected of having been doing so for years before the quake as well, it has been learned.

When construction costs were raised due to a shortage of personnel and other resources after the earthquake disaster, the corporations worked together to push up the prices that they would do the jobs for, it is alleged. Now, it has been learned that this conspiring is thought to have continued for over five years for a period stretching both before and after the quake disaster.

On Jan. 28 and 29 this year, the commission searched the offices of 20 companies including major construction firm Nippo Corp. on suspicion of breaking the anti-monopoly law by illicitly restricting others' transactions. The companies are accused with regard to auctions for 12 expressway paving projects that were ordered by East Nippon Expressway Co.'s Tohoku branch in August and September of 2011.

According to the source, one or more of the businesses has admitted to the allegations that corporations conspired together to rig the 12 auctions, telling the commission, "Such conspiring was taking place from at least a few years prior to the earthquake."

"Multiple large corporations acted as 'organizers,' distributing the construction jobs to each of the companies (who were in on it)," the source says that the commission was told.

According to the recorded results of auctions for the Tohoku branch's 11 paving projects from April 2010 through November 2010, the average winning bid constituted 80.23 percent of the maximum limit. By contrast, the average winning bid was 94.77 percent of the limit for the 12 post-quake auctions alleged to have been manipulated -- a jump of around 14 percentage points. The commission holds that the conspiring companies made their bids at these high levels in order to cover the raised expenses caused by personnel and material shortages after the quake.

The companies are thought to have collaborated not only on manipulating the bids for paving contracts from the East Nippon Expressway Co., but also on those from the Ministry of Land, Infrastructure, Transport and Tourism's Tohoku Regional Bureau. The committee appears to believe that these started some years before the Great East Japan Earthquake as well.

East Nippon Expressway Co. was founded in October 2005 together with the privatization of four public corporations, such as the Japan Highway Public Corp. It handles management of expressways and road construction in eastern Japan, and the national government provides over half of its funds. The company recorded around 859 billion yen in sales for the 2013 fiscal year.

The Japan Fair Trade Commission is continuing to look into the matter.