Maglev bid-rigging may have begun after no-bid deals refused

March 22, 2018

Tokyo- Major Japanese general contractors may have started colluding for Central Japan Railway Co.'s Chuo Shinkansen magnetic levitation high-speed train project after the railway operator, better known as JR Tokai, rejected their proposal for contracts to be awarded without competitive bidding, it was learned Wednesday.

The Fair Trade Commission plans to file on Friday criminal complaints against Taisei Corp., Kajima Corp., Obayashi Corp. and Shimizu Corp. , and concerned officials of the four general contractors, including former Taisei executive Takashi Okawa, 67, and Kajima official Ichiro Osawa, 60, for their suspected violation of the antimonopoly law, informed sources said.

Acting on the FTC move, the Tokyo District Public Prosecutors Office is expected to indict the firms and individuals within Friday, the sources said.

JR Tokai launched order procedures after the Japanese government approved in October 2014 its project to construct the maglev line between Shinagawa Station in Tokyo and Nagoya Station in Aichi Prefecture, central Japan.

By the end of last year, JR Tokai struck 24 contracts for the maglev project, with 23 of them concluded through competitive bidding.

According to the sources, JR Tokai required high levels of safety for the construction of new station facilities underneath Shinagawa and Nagoya stations, both of which are used for the company's existing Shinkansen bullet train services.

JR Tokai also asked specific general contractors to conduct prior research on appropriate construction methods and had them shoulder huge related costs, the sources said.

Officials of the general contractors therefore called on JR Tokai to grant contracts to them without bidding, aiming to make sure that they clinch orders without fail for the works for which they conducted the prior research for the railway company, the sources said.

As JR Tokai rejected the request and adopted competitive bidding instead, however, the officials started conspiring to adjust bids, according to the sources.

Earlier this month, the Tokyo prosecutors office's special investigation squad arrested Okawa and Osawa for allegedly breaching the antitrust law by colluding with Obayashi and Shimizu officials around 2014-2015 to predetermine successful bidders from the four companies for the construction works at the two stations.

The two have denied the allegations against them, while former senior officials of Obayashi and Shimizu admitted their involvement in the malpractice, the sources said. Jiji Press