The Defense Agency announced Friday that it will suspend business dealings with electronics giant NEC Corp. and affiliate Toyo Communication Equipment Co. from Oct. 1 in the wake of a procurement scandal involving former officials of the agency and the companies.
The chief of the agency’s Equipment Bureau, Kozo Oikawa, said Toyo Communication would be ordered to refund 2.1 billion yen to the state coffers to compensate for having overcharged for communications equipment in the past.
NEC provided the agency with defense equipment worth more than 100 billion yen in fiscal 1997, making the company its fourth-largest supplier on a value basis. The agency declined to mention when dealings with the companies would resume, and Toyo Communication said it will comply with the agency’s order for repayment. NEC, however, said it has not heard about the agency’s plans to suspend business with the two firms.
The measures followed the indictment by Tokyo prosecutors Tuesday of four men, including a former senior Defense Agency official, on charges of breach of trust for causing some 2.1 billion yen in damage to state finances through the procurement of defense equipment for the agency.
Toyo Communication had been granted a reduction in the amount to be refunded in return for agreeing to hire retiring Defense Agency officials, according to prosecutors.
The agency had previously maintained that the amount it had asked Toyo Communication to refund had been the correct amount.
On Friday, the agency admitted that senior officials had instructed their subordinates to remove related documents from the premises — to other buildings and to their homes — prior to raids by the public prosecutors earlier this month.
The Tokyo District Public Prosecutor’s Office raided the agency twice this month — once in connection with the procurement scandal and another time because of the alleged hiding of documents.
The agency spokesman admitted that its in-house investigation has not revealed new findings.
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