Was bid-rigging going on behind a huge 9 trillion yen construction project? A thorough probe must be conducted.
In connection with the Chuo Shinkansen magnetic levitation high-speed railway project, the Tokyo District Public Prosecutors Office's special investigation squad has arrested a former Taisei Corp. executive officer and a full-time manager of Kajima Corp. on suspicion of violating the Antimonopoly Law. They are alleged to have conspired with officials of two other major general contractors -- Obayashi Corp. and Shimizu Corp. -- to predetermine successful bidders from the four companies in violation of the law.
In the maglev railway construction ordered by Central Japan Railway Co. (JR Tokai), the joint ventures headed by each of the four general contractors received almost even shares of orders for 15 of the 24 projects whose contracts were completed by last year. On the construction of new Shinagawa and Nagoya stations, they are suspected to have predetermined successful bidders and estimated contract values.
If this is true, there will be no escaping criticism that they lack the ability to reform themselves. Major general contractors have been prosecuted time and again for bid-rigging on public works and other projects. The four construction companies declared in 2005 their commitment to leaving the bid-rigging practice behind.
Initially, the special investigation squad probed Obayashi on suspicion of fraudulent obstruction of business in connection with the construction project on emergency exits in Nagoya. The bid-rigging scheme involving the four firms seems to have been discovered in the process.
The four companies' responses to the investigation took two forms. Obayashi and Shimizu admitted to illicit coordination for dividing contracts among the four firms. Based on the surcharge reduction and exemption system of the Antimonopoly Law, Obayashi and Shimizu reported their legal violations to the Fair Trade Commission.
Strict verification vital
Taisei and Kajima, however, are said to have denied the alleged bid-rigging, although they admitted the information had been exchanged among the four companies. The squad's hard-line stance toward uncovering the full truth about the case is reflected in the arrest of the two executives.
The Chuo Shinkansen maglev train, which will link Tokyo and Osaka in slightly more than one hour, aims to begin partial service covering the distance from Tokyo to Nagoya in 2027 ahead of full service. The project involves difficult construction work that requires the world's top-level technologies, including the drilling of a 25-kilometer-long tunnel directly under the Southern Japanese Alps and construction of new stations deep underground.
These construction projects would not be possible without the expertise and financial strength of the four companies representing Japan. Did they dare to submit high bidding prices knowing that other companies in the same industry could not undertake the projects?
Of the total construction cost of 9 trillion yen, 3 trillion yen is financed by the government's fiscal investment and loan programs even though it is not a public works project. If competition is distorted by illicit bidding and the construction cost increases as a result, it will ultimately be reflected in passenger fares. The people would end up paying the price for that.
Also, it has been pointed out that the construction work will be delayed due to the bid-rigging scandal.
There is a possibility that JR Tokai officials in charge leaked estimated values of the construction project. JR Tokai makes it mandatory for participants in the bidding and other activities related to the project to submit a letter pledging not to violate laws.
Were the past bidding and contracts properly handled? JR Tokai, as the project implementing body, must verify this point strictly.
(From The Yomiuri Shimbun, March 3, 2018)
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