Execs held over inflated landscaping cost scam

Kyodo

Police arrested nine people Friday, including former executives of a semipublic joint venture here, on suspicion of committing aggravated breach of trust in connection with inflated landscaping purchases for an artificial island.

Those arrested include Shinichi Shiki, 66, a former president of Port of Hakata Development Co.; its former managing director, Tachiki Oba, 65; former Fukuoka municipal assembly member Toji Nishida, 52; Fukuoka police said.

Investigators alleged that the suspects inflicted roughly 315 million yen in damages on Port of Hakata Development for the purchase of unnecessary trees at prices that were higher than market value.

Shiki, also a former deputy mayor of Fukuoka, allegedly conspired with others and purchased some 300 zelkova trees between 1999 and 2000, despite having no concrete plan for their use in the city’s project to create an artificial island in Hakata harbor in Fukuoka, police said. He was sacked as president of the third-sector firm in January 2003, after the allegations surfaced.

A firm with links to Nishida made some 400 million yen in profits by acting as a go-between in the sale of garden stones to Port of Hakata Development, they said.

Nishida unsuccessfully ran for the House of Representatives in 1996 and 2000 as a candidate on the Liberal Democratic Party ticket. Investigative sources said police suspect some of the money from the deal might have been used to fund his campaign.

The city of Fukuoka filed a criminal complaint with police against the suspects, alleging they inflicted damages totaling 770 million yen to the city through the purchases of the trees and stones.

Shiki had maintained that the purchase of the trees was “a management decision.” Nishida said the deal regarding the garden stones was purely a commercial transaction between private-sector parties.

The 460 billion yen port development project, which began in 1994, will reclaim about 400 hectares of land to construct a man-made island.

Developers plan to build piers equipped to handle large freighters as well as housing complexes and a district exclusively for information technology-related businesses on the island.

Port of Hakata Development is in charge of the reclamation of about half of the land for the island. Original plans called for it to borrow money from banks and return the loans by selling the reclaimed land.

But few firms have expressed interest in moving to the new island, and land for residential areas has been unpopular.

Some local citizens’ groups have said the project is a failure and that construction should be halted. The city maintains that it will be profitable in the long term.