Obayashi, Shimizu Fined over Maglev Project Conspiracy

October 23, 2018

Tokyo- Tokyo District Court ordered major Japanese general contractors Obayashi Corp. and Shimizu Corp.  on Monday to pay fines for their involvement in bid-rigging for an ultrahigh-speed magnetic levitation train project of Central Japan Railway Co., better known as JR Tokai.

Obayashi was fined 200 million yen and Shimizu 180 million yen for violating the antimonopoly law, against public prosecutors' demand for 200 million yen for each company.

"The bid-rigging culture appears to be deep-rooted," Presiding Judge Takumi Suzuki said. The two Tokyo-based companies admitted to the allegations against them.

The judge said that senior officials of the contractors communicated closely with each other to determine the winners of contracts related to the maglev project in advance and exchanged information on estimates on contract prices and other matters.

"The two leading general contractors' illegal practice of prearranging the winners for the national-scale project has had a major impact on society," the judge said.

While acknowledging that Obayashi offered to cooperate with the investigation ahead of other companies involved in the malpractice, the judge said that the company's criminal responsibility is heavy as it had tempted Shimizu into the bid-rigging.

The judge said Shimizu took part in the misconduct later than other companies, explaining the reason for cutting the amount of fine for the company from the level sought by the prosecutors.

Over the case, a former executive of Taisei Corp. <1801> and a senior official of Kajima Corp. <1812>, as well as the two peer general contractors, have been indicted. The two individuals and the two companies are now in pretrial procedures.

According to Monday's ruling, officials of Obayashi and Shimizu colluded with the former and incumbent officials of Taisei and Kajima.

Specifically, they held meetings at places, including a Tokyo restaurant, between around April 2014 and August 2015 to predetermine the winners of the contracts for three sections at Shinagawa and Nagoya stations for the Chuo Shinkansen maglev line project of JR Tokai.

They were also found to have shared information on price estimates before submission to the railway operator.

In separate statements, Obayashi and Shimizu said that they take the day's ruling seriously and will make efforts to regain public trust.

JR Tokai aims to launch the maglev line linking Shinagawa Station in Tokyo and Nagoya Station in the central Japan prefecture of Aichi in 2027. The line is planned to be extended to Osaka, western Japan, later.

The total cost for the project is seen reaching some 9 trillion yen. Jiji Press