Japan Highway Public Corp. may be keeping a secret.
A senior official claimed in a monthly magazine out Thursday that Japan Highway compiled a balance sheet last year showing its total liabilities far exceed assets. The article also says the finding was covered up so the public corporation would not be forced to greatly scale down expressway construction plans.
Another official denied the allegation during a news conference, saying no such balance sheet was compiled.
Japan Highway is a semigovernmental company that builds and manages expressways nationwide. It has been the focus of fierce debate between lawmakers calling for streamlining and privatizing the debt-ridden firm, and others pushing for construction of more toll roads.
The government has decided to privatize Japan Highway in fiscal 2005, but its specific form and the fate of pending road construction plans are still up in the air.
According to an article written by Sachio Katagiri, deputy head of the Shikoku branch of Japan Highway, the firm’s total liabilities exceeded its assets by 617.5 billion yen as of March 2001.
Japan Highway had claimed that its accumulated fund for future debt repayment totaled 9.5 trillion yen, but the new balance sheet showed the fund itself was in the red by more than 1 trillion yen, Katagiri said in the article in the latest edition of Bungei Shunju.
If his allegation is true, there would be little room for new expressway construction if the company is privatized — a severe blow to lawmakers pushing for more roads in rural areas.
Japan Highway rushed to cover up the figures and draw up another financial statement by playing with accounting rules so that total assets exceeded liabilities, Katagiri alleged.
Japan Highway, criticized for its snowballing debts and opaque balance sheet, had been asked last year by a special advisory panel to the prime minister to draw up new financial statements based on private-sector accounting rules.
Katagiri, who worked at the secretariat of expert panel on privatizing the firm, has been regarded as a reformist. But in a move widely seen as a retaliatory demotion, he was transferred to the Shikoku branch on July 1.
Akira Hirai, director general at the Privatization Bureau of Japan Highway, told a news conference that the firm had a study group to compile such a balance sheet but the group’s work was halted halfway as it found it did not have sufficient data to correctly estimate the value of its assets.
Hirai, indicating Japan Highway is considering a libel suit, said some unofficial data may have been leaked outside but argued that such data is not valid.
Hirai was unable to answer questions concerning when the study group was formed and when it stopped assessing the corporation’s assets. He promised to hold a later news conference to give further details.