4 general contractors indicted over Maglev project bid-rigging

March 24, 2018

Tokyo- Japanese public prosecutors indicted four major general contractors on Friday for rigging bids in the Chuo Shinkansen high-speed magnetic levitation railway project in violation of the anti-monopoly law.

The Tokyo District Public Prosecutors Office's special investigation squad indicted Taisei Corp. , Kajima Corp., Obayashi Corp. and Shimizu Corp. for their alleged involvement in the bid-rigging.

Also indicted were former Taisei executive Takashi Okawa, 67, and former Kajima civil engineering sales executive Ichiro Osawa, 60.

The indictments came after the Fair Trade Commission filed criminal complaints against the four companies and the two former executives earlier on Friday.

The prosecutors concluded that a former Shimizu executive and two other people including a former Obayashi vice president prearranged winners of contracts in the maglev project in conspiracy with Okawa and Osawa, who were arrested earlier this month, informed sources said.

But the prosecution decided not to indict the three people, partly because Shimizu and Obayashi admitted their involvement in advance and cooperated with the investigation, the sources added.

Shimizu participated in the bid-rigging later than other firms. This may also be a reason for the leniency for the former Shimizu executive, according to the sources.

According to the indictments, officials of the four companies held meetings between April 2014 and August 2015 to predetermine successful bidders for the construction of three sections of the planned Shinagawa and Nagoya stations ordered by Central Japan Railway Co. <9022>, or JR Tokai.

They are also suspected of sharing information about price estimates before presenting them to JR Tokai.

In the 9-trillion-yen maglev project, a total of 24 construction contracts had been concluded mainly by JR Tokai by the end of last year. Of them, three to four contracts were won by each of the consortia led by the four general contractors.

Of the deals involving the four contractors, the prosecution and the FTC narrowed the target contracts to those whose bidders were limited to the four companies, in order to establish a criminal case.

The investigation squad searched Obayashi in December last year on suspicion of fraudulent obstruction of business. Later, the squad teamed with the FTC to raid the four companies for alleged antimonopoly law violations.

JR Tokai aims to launch Shinagawa-Nagoya maglev line operations in 2027. Jiji Press