Investigators raided the offices of major paving companies on Jan. 20 in connection with a massive collusion case related to reconstruction after the 2011 Great East Japan Earthquake and tsunami.
Investigators raided the offices of major paving companies on Jan. 20 in connection with a massive collusion case related to reconstruction after the 2011 Great East Japan Earthquake and tsunami.
The headquarters of Nippon Road Co. and Maeda Road Construction Co. were among the offices searched by the Tokyo District Public Prosecutors Office and Japan Fair Trade Commission (FTC) for evidence of suspected violations of the Anti-Monopoly Law.
According to sources, those two firms along with Nippo Corp., a construction company, are the lead companies that are suspected of orchestrating a group effort to bid for 12 road paving projects.
The jobs were opened for bidding by the Tohoku Regional Head Office of East Nippon Expressway Co. between August and September 2011.
FTC officials had been investigating a total of 20 companies since January 2015 about possible collusion, and investigators with the prosecutor’s office began questioning officials at the various companies from late last year. Some of the companies involved have admitted to investigators that they colluded on the bids, according to sources.
"With expenses for raw materials shooting up, we wanted to win the bid for the project at a high price," one official reportedly said.
Another said, "In the end, we only gained little, if any, profits."
The projects were won by 12 companies with a total bid value of 17.6 billion yen ($149 million).
According to sources, sales officials at the Tohoku branches of the three lead companies conferred about how to divvy up the 12 projects.
After they decided on the projects their respective companies would handle, they then decided on which companies should handle the other nine projects. Those companies were asked to submit bid proposals to the lead companies.
Other companies were also asked to cooperate and submit higher bids to cover up the appearance of collusion.
The winning bids for the 12 projects were on average about 95 percent of the estimated cost. That was about 10 percentage points higher than the average ratio for road paving projects in fiscal 2010.
FTC officials believe that collusion occurred on national road projects opened for bidding by the Ministry of Land, Infrastructure, Transport and Tourism from before the 2011 natural disasters.
However, the complicity only spread to expressways after reconstruction budgets were set aside by the government in the wake of the Great East Japan Earthquake.