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Kepco: the monstrous 500-pound gorilla of Kansai

by Eric Johnston

Staff Writer

Last month, Chimori Naito, a 91-year-old former vice president at Kansai Electric Power Co., admitted what was hardly a secret but which put the utility under intense media scrutiny.

Naito said in a series of interviews with the Asahi Shimbun that he supervised under-the-table cash payments to seven prime ministers and key politicians in the ruling and opposition parties between 1972 and 1990 to ensure favorable policies, especially nuclear power policies. Naito guessed Kepco’s annual payoffs were in the hundreds of millions of yen.

Kepco got its money’s worth. Prior to March 11, 2011, Japan relied on nuclear power for about a third of its electricity needs. But half of Kepco-supplied electricity came from nuclear power. Fukui Prefecture became home to 11 Kepco reactors, the largest concentration in the country and, perhaps, the world. And it was Kepco’s two Oi reactors that were switched back on in the summer of 2012 despite massive public opposition.

In terms of local economic presence, Kepco is the 500-pound gorilla. The company employs more than 22,000 people directly (and, indirectly, thousands more), has nearly 40 affiliated firms, and owns shares in about a dozen local public-relations facilities. These often take the form of “educational museums” that promote nuclear power. It also has small investments in Kansai-area television and radio stations.

All of this makes Kepco similar to Japan’s other utilities. But over the past two decades, as other Kansai firms moved to Tokyo or overseas, Kepco has consolidated its power and influence over regional politics and policymaking to a degree unprecedented elsewhere, and in ways not always obvious to outsiders or Kansai residents.

Senior Kepco officials serve as top representatives of hugely influential organizations such as the Kansai Economic Federation, which draws up regional political and economic strategies, and serves as a de facto political lobbying group in Tokyo. A Kepco chairman has led the federation for 27 of its 68 years, and Shosuke Mori, Kepco’s current chairman, presently heads it. Many of Kansai’s failed public works projects funded by Osaka were strongly backed by the federation.

In addition, why was the barely used second runway at Kansai airport constructed despite criticism it was a waste of public funds? You can thank a local airport promotion group headed by Kepco’s chairman. Given that Kepco has long provided direct election support, in the form of company “volunteers,” to local LDP candidates, the fact Kepco-favored plans usually become reality is hardly surprising.

Ideas promoted by Kepco-led organizations have several common traits. First, they tend to result in massive physical structures (buildings, transportation systems) that, obviously, require Kepco-generated electricity to run and maintain — nuclear-generated electricity, of course, not renewables. Second, they are often based on the “Kepco School of Management,” a mixture of top-down, centralized planning among a select few men over the age of 60 who decide what’s best for the local economy — and for themselves.

The result of this Kepco-influenced Kansai economy since the mid-1990s has largely been one of stagnation, an accelerated shift to Tokyo of local money and talent, and a sense the gap between Kansai and other regions in East Asia in particular is growing. This is a major reason why Osaka Mayor Toru Hashimoto hates Kepco and publicly criticizes it.

But Kansai’s 500-pound gorilla remains as strong as ever, and despite the recent media attention, looks set to remain so for years to come. Which makes one wonder: Will we be reading, in 30 years, about how some Kepco official paid off Liberal Democratic Party officials to help ensure the return of Shinzo Abe and the LDP?

View from Osaka is a monthly column that examines the latest news from a Kansai perspective.