As the investigation continues into the suspected bid-rigging case involving the top aide to Lower House member Muneo Suzuki, prosecutors now believe that the initiative for the scheme was taken by a Tokyo-based engineering firm.

The company, JGC Corp., was trying to win a contract for a government-funded construction project on a contested island northeast of Hokkaido.

Akira Miyano, 53, Suzuki’s secretary, was arrested Tuesday on suspicion of interfering in the bidding process for the building, locally known as “Muneo House” on Kunashiri, one of the Russian-held islands off Hokkaido that are claimed by Japan.

According to the sources, JGC actively sought Miyano’s help in forging a deal between itself and two Hokkaido contractors that the bidding process favored.

The building, which doubles as a lodging and evacuation facility and is formally known as the House of Friendship, was completed in October 1999. It was erected as part of a Japanese government-funded aid project for the disputed islands.

Under the deal, the two Hokkaido builders — Watanabe Kensetsu Kogyo and Inugai Komuten — nominally became the principal contractors, but the bulk of the 416 million yen project was in fact handled by JGC, according to the sources.

Besides Miyano, prosecutors on Tuesday arrested Juichi Watanabe, 57, president of Watanabe Kensetsu; Shoji Takahashi, 59, senior managing director of the firm; Masaru Inugai, 60, president of Inugai Komuten; JGC employees Teruo Karube, 53, and Toru Kikuchi, 53; and Yoshiji Ishii, 53, an employee of Nippon Koei Co., a Tokyo-based consulting firm.

Watanabe Kensetsu is based in Nemuro, eastern Hokkaido, and Inugai Komuten in the nearby town of Nakashibetsu.

The prosecutors also searched Suzuki’s office in Kushiro, Hokkaido, for seven hours, ending their search early Wednesday morning.

JGC had initially aimed at becoming the principal contractor for the project, but had to give up its plan because bidding for the project was limited to companies in Hokkaido that had experience in construction work in Nemuro, according to the sources.

JGC then decided to approach Miyano, who was known to be dealing with local businesses, they said.

According to investigations, JGC showed strong interest in the project after being sounded out by Nippon Koei, which had signed a consultant contract in April 1999 with the Cooperation Committee, a Foreign Ministry affiliate that ordered the House of Friendship construction.

But in May 1999, the committee secretariat decided to restrict bidding for the project to firms in the Nemuro area, following pressure from Suzuki, the sources claimed.

JGC’s Kikuchi visited Miyano at Suzuki’s office in Kushiro to seek help on a plan to have local contractors be nominally in charge of the project while the actual work would be done by JGC, the sources said.

Miyano agreed with the request and in early June, he arranged for Kikuchi, Nippon Koei officials, Watanabe and Inugai to meet at Suzuki’s office, where the deal was reached, the sources said.

Suzuki quit the ruling Liberal Democratic Party on March 15 following a series of scandals, including allegations that he excessively meddled in Foreign Ministry affairs and favored construction firms in his constituency in contracts for ministry-linked public works projects.

Miyano’s arrest intensified not only demands by the opposition camp for Suzuki to quit the Diet, but also pressure from within the ruling coalition that he voluntarily step down.

In a regular news conference, Deputy Chief Cabinet Secretary Shinzo Abe said the government expects Suzuki to decide on his own whether to quit the Diet.

“Mr. Suzuki has already left our party. He will make a judgment as a veteran politician,” Abe, a member of the LDP, which is led by Prime Minister Junichiro Koizumi, told reporters.

At the same time, Abe urged the opposition camp not to disrupt Diet proceedings by focusing too much on the Suzuki scandals and instead cooperate with the LDP-led ruling bloc in debates so the Diet can pass key bills before its ongoing session ends June 19.

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