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Obayashi Corp. said Monday that Takeo Obayashi, chief executive officer and chairman, who hails from the contractor’s founding family, and President Norio Wakimura will step down to take responsibility for the arrest of company officials for alleged bid-rigging for a public works project.

Toru Shiraishi, 59, senior managing officer, will take over as CEO and president after receiving approval at a June 28 shareholders’ meeting.

Last month, prosecutors arrested Obayashi adviser Shigeo Morii and two other officials, among others, on suspicion of rigging bids in 2005 for a municipal government-ordered project to construct an incineration plant in Hirakata, Osaka Prefecture. The contract went to Obayashi.

CEO Obayashi, 52, will be demoted to board director, while Wakimura, 67, will become a special adviser.

The company said Yoshihisa Obayashi, 66, executive vice president, will also quit his post, which he only assumed in April, to become an adviser.

The top management reshuffle follows a series of arrests of Obayashi officials in connection with similar wrongdoing connected to public works projects in Wakayama Prefecture and Nagoya. The reshuffle will likely diminish the founding family’s clout in the contractor, industry observers said.

Obayashi said it hopes to regain public trust by carrying out the management reshuffle.

Shiraishi, the new nominee for president, joined Obayashi in 1971 after graduating from the University of Tokyo. He has been senior managing officer since April.

In the case involving public works projects in Wakayama Prefecture, one former adviser to Obayashi was convicted Wednesday of colluding with officials from three other contractors to rig bids. Former Gov. Yoshiki Kimura is currently on trial on bribery charges.

In the case of the Nagoya subway project, another former Obayashi adviser who worked at its local branch office has been prosecuted for alleged bid-rigging and faced his first trial session in May.

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