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Prosecutors raided engineering firm JGC Corp., the consultancy Nippon Koei Co. and other locations Wednesday in connection with alleged bid-manipulation over the construction of a Japanese-funded building on Kunashiri, a Russian-held island claimed by Japan.

According to investigative sources, JGC approached Akira Miyano, a senior secretary of lawmaker Muneo Suzuki, to seek his help and brokered a deal for the project with two construction companies in Hokkaido, Suzuki’s constituency.

The sources alleged that Miyano interfered in the July 1999 bidding for the project by arranging for a local joint venture to win the contract.

The local joint venture agreed to subcontract the project to JGC at a meeting set up by Miyano after JGC dropped plans to bid because bidders were limited to Hokkaido-based companies with work experience in the Nemuro area, the sources said.

The building, which doubles as an inn for visiting Japanese and an emergency evacuation facility for locals and is formally known as the House of Friendship, was completed in October 1999. It was built as part of a Japanese government-funded aid project for the Russian-held islands off Hokkaido, including Kunashiri, that are claimed by Japan.

Under the deal, the two Hokkaido builders — Watanabe Kensetsu Kogyo and Inugai Komuten — were to publicly serve as the principal contractors, while the 416 million yen project would in fact be handled by JGC, according to the sources.

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

Miyano, 53, was arrested Tuesday in connection with the case along with 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.

Miyano is suspected of causing “damage to the credit of another” and “obstruction of business” under Article 233 of the Penal Code. If found guilty, he could face a prison term of up to three years or a fine of up to 500,000 yen for injuring the credit of another party or impeding its business by circulating false reports or by fraudulent stratagem.

In addition to JGC and Nippon Koei, prosecutors also searched Suzuki’s office in Kushiro, Hokkaido, for seven hours, wrapping it up early Wednesday morning.

According to investigations, JGC showed strong interest in the project after being approached 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, following pressure from Suzuki, the sources alleged.

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 1999 arranged for Kikuchi, Nippon Koei officials, Watanabe and Inugai to meet at Suzuki’s office, where the deal was sealed, according to the sources.

Suzuki, 54, quit the ruling Liberal Democratic Party on March 15 following a series of scandals, including allegations that he meddled in Foreign Ministry affairs and assaulted a ministry employee.

On Wednesday, the Lower House approved a request by prosecutors to arrest Suzuki over allegations that he received a 5 million yen brib from a Hokkaido-based lumber firm in 1998, in a case not related to the island project.

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