Yoshishiro Kimura, the mayor of Ishioka, Ibaraki Prefecture, was arrested Tuesday on suspicion of obstructing a public works tender by receiving money in connection with a bid won by Hitachi Ltd.

News photoYoshihiro Kimura

The Tokyo District Public Prosecutor's Office arrested six others on the same charge, including Mitsuo Ozaki, a 56-year-old executive at Tokyo consulting firm Gyosai Toshi Kaihatsu Kenkyujo (Gyosai-ken), as well as a Hitachi employee, prosecutors said.

Sources said Hitachi Plant Engineering & Construction Co., a Hitachi subsidiary, paid several million yen to the 59-year-old mayor via Gyosai-ken.

"I must say there were problems on both sides," said Chief Cabinet Secretary Yasuo Fukuda, referring to the mayor and the consulting firm executive.

Prosecutors have searched Kimura's home in Ishioka and Ozaki's residence in Tokyo for evidence.

Kimura allegedly received the cash after Hitachi won a public tender in March 1999 to build an electrical installation for a water purification plant for 920 million yen, the sources said.

Prior to the tender, Gyosai-ken obtained information from the mayor about the city's target price for the project, they said.

Ozaki informed Hitachi of the figure and paid the money to the mayor, according to the sources.

Later, Hitachi Plant Engineering & Construction transferred the same sum to a bank account held by the consulting firm, they said.

Kimura had earlier denied providing the information or receiving the money.

Ozaki has also denied the allegations. He set up the company in 1994, and is suspected of contacting the leaders of other municipalities regarding public works projects, the sources said.

He is a former secretary to House of Representatives member Michihiko Kano, who left the ruling Liberal Democratic Party in 1994 and is currently one of the five vice presidents of the Democratic Party of Japan. the largest opposition party.

Kano on Tuesday denied having any connection with the scandal.

"I have nothing to do with it," Kano said in Tokyo, adding it was a long time since Ozaki worked as his secretary. But he pledged to consider taking "some measures" because Ozaki had previously worked for him. It is not known when Ozaki last worked in Kano's office, but Ozaki earlier told Kyodo News that he has not met the lawmaker for seven to eight years. He opposed Kano's defection from the LDP in 1994.

Two held over fraud

KOBE (Kyodo) Two men were arrested Tuesday and a third is being sought for allegedly defrauding Komatsu Construction Co. of about 300 million yen worth of bills, police said.

Police from Hyogo Prefecture and other authorities said they have arrested Nobuhiko Sekine, a former deputy chief of Komatsu's Osaka branch, and another man in the case, and are also looking for Tsuneo Takaya, 63, former president of a company managing prefabricated housing in Kobe. Takaya, they said, is the key suspect in the case.

According to police, the three swindled the Tokyo-based midsize construction company out of five promissory notes worth 300 million yen.

They allegedly did so by preparing a fictitious workers' dormitory scheme in connection with a thermal power plant being built by Kansai Electric Power Co. in Gobo, Wakayama Prefecture.

Sekine, 60, denied the allegations, saying he did not intend to defraud Komatsu Construction, the police said.