4 Contractors Suspected of Bid-Rigging in Maglev Projects

December 18, 2017

Tokyo- Public prosecutors and trustbusters raided the head offices of major general contractors Kajima Corp. and Shimizu Corp. on Monday for alleged bid-rigging for contracts related to a large-scale project to build Japan's first magnetic levitation Shinkansen train line.

The two companies, along with two other construction giants Taisei Corp. and Obayashi Corp. , are suspected of violating the anti-monopoly law through unfair restraint of trade.

The Tokyo District Public Prosecutors Office's special investigation squad and the Japan Fair Trade Commission also plan to search the offices of Taisei and Obayashi shortly, hoping to bring the whole truth to light, informed sources said.

Earlier this month, the special squad raided Obayashi, suspecting that the contractor committed fraudulent obstruction of business by urging other companies not to participate in biddings for projects related to the work to open the ultrahigh-speed maglev train service between Tokyo and the central Japan city of Nagoya in 2027.

After an analysis of seized documents and interviews with related officials of the contractors, the prosecutors apparently judged that Obayashi and the three other contractors made bid-rigging arrangements.

In placing bids for maglev train-related projects implemented by Central Japan Railway Co. , or JR Tokai, officials of the four major construction companies are suspected of having advance consultations to avoid legitimate competition, according to the sources.

Starting in August 2015, JR Tokai signed deals with general contractors for a total of 22 construction projects related to the maglev train plan, including those to build train stations, tunnels and emergency exits.

Kajima, Shimizu, Obayashi and Taisei, known as super general contractors, each formed a consortium to participate in the biddings.

The consortium led by Obayashi won orders in four projects, Kajima in three, Taisei in four and Shimizu in four, together dominating about 70 percent of all projects.

Senior officials of the four contractors have told the media that they were not involved in the alleged fraudulent acts.

Company officials involved in the projects are believed to have given similar explanations when questioned by the prosecutors on a voluntary basis.

Low-interest loans financed with funds raised by Japanese government bonds are utilized in the maglev train project, which is estimated to cost a total of 9 trillion yen. Jiji Press