OSAKA – Eleven major plant engineering companies accused of rigging bids for sewage and sludge disposal plant projects created “how-to” bid-rigging manuals to facilitate the scam, investigative sources said Wednesday.
The documents have been circulating for years among executives involved in similar projects, the sources said.
On Tuesday, prosecutors arrested officials from seven major plant engineering companies, including Kubota Corp., Ataka Construction & Engineering Co. and Ebara Corp., on suspicion of unfair trade practices, in violation of the Antimonopoly Law.
Arrested were Kenichi Terakawa of Kubota, Shiro Umeda of Ataka, Tadayoshi Tsuji of Kurita Water Industries Ltd., Masanori Hasegawa of Ebara, Shinichi Usuda of JFE Engineering Corp., Kunio Tanno of Nishihara Environment Technology Inc., and Fumitake Nakamura of Hitachi Zosen Corp.
The arrests by the Osaka District Public Prosecutor’s Office came after the Fair Trade Commission filed a criminal complaint with Prosecutor General Kunihiro Matsuo against 11 engineering firms on suspicion of rigging bids in eight sewage and sludge disposal plant projects between February and July 2005.
Osaka prosecutors appear to have known about the manuals, which they believe provide evidence that the plant makers have repeatedly rigged bids based on agreed rules.
Prosecutors are believed to be investigating how the manuals came to be written and are analyzing their contents.
The sources said that according to the manuals, when a public-sector entity orders construction of a facility, plant makers belonging to the bid-rigging group hold a preliminary meeting to confirm the interested party.
When two or more plant builders are interested in the same project, they compete by offering cash or assistance to a consulting firm hired by the public-sector entity to do the design work. The engineering firm that is judged to have made the largest contribution to the design is then tapped to become the eventual winner.
Each of the engineering firms typically obtains plant design drawings from the consulting firm and demonstrates their contribution by carrying out design work on the the consultant’s behalf, or in some cases, by directly offering cash.
“In the past, the entire industry was engaged in bid-rigging according to the rule, which was considered customary. Everyone thought bid-rigging was a necessary evil,” an executive at a plant engineering firm said.
The 11 engineering firms suspected of bid-rigging are Ebara, Ataka, Kubota, Kurita Water Industries Ltd., Nishihara Environment Technology, JFE Engineering, Sumitomo Heavy Industries Ltd., Mitsui Engineering and Shipbuilding Co., Mitsubishi Heavy Industries Ltd., Hitachi Zosen and Takuma Co.