Major Japanese construction company Obayashi Corp., which is at the heart of a scandal over collusion in bidding for a maglev train link project, has decided to take a rare and pre-emptive step: Come clean about its role, and possibly evade criminal prosecution.
Ahead of the “plea bargain” system set to be introduced next year, sources close to the matter said Tuesday that Obayashi has admitted to the Japan Fair Trade Commission its involvement in bid obstruction with three other major contractors — Taisei Corp., Kajima Corp. and Shimizu Corp. — exempting it from a fine under the commission’s leniency rules.
Prosecutors are keen to use the plea bargain arrangement to make progress in exposing criminal cases, but there are concerns about heavily relying on this method.
Under the system, prosecutors can agree not to indict, to withdraw an indictment, or give a lighter sentence in exchange for cooperation from the suspect or defendant — such as giving evidence against another person. This provision was incorporated into the revised penal code that was enacted in May 2016 as part of reforms of investigations and trials.
Debate about improving the transparency of investigations was sparked by a fraud case that eventually acquitted former senior health ministry official Atsuko Muraki.
Fearing that mandatory recording of police and prosecutors’ interrogations of suspects could make it harder to obtain confessions from the accused, the investigators have highlighted the need for a plea bargain system.
Speaking to journalists when he assumed his post in September, Hiroshi Morimoto, head of the special investigation squad at the Tokyo District Public Prosecutors Office, said he was keen on using the system. He added that he wants to “deepen understanding of the system and prepare to operate it appropriately.”
In the run-up to rolling out the system, which is set to be completed by June 2018, the district and high public prosecutors offices nationwide have been instructed on the operational policy. A task force made up of veteran prosecutors was also set up at the Supreme Public Prosecutors Office in July this year.
With the prosecutors’ special squad not having been involved in big cases in recent years, prosecutors and representatives from the Justice Ministry expect the plea bargaining system to invigorate the squad, which is tasked with pursuing major cases such as political corruption and fraud.
The Tokyo prosecutors are looking into how the nation’s four biggest contractors won 15 out of the 22 construction tenders put out by Central Japan Railway Co., more popularly known as JR Tokai, for the ¥9 trillion ($80 billion) project. The magnetic-levitation line will link Tokyo and Osaka in about an hour.
Earlier this month the prosecutors’ special investigation squad raided Obayashi’s head office, on suspicion that it had engaged in fraudulent obstruction of business in a tender to build an emergency exit for the maglev train line in Nagoya. After the initial raid, Obayashi told the FTC that it had conspired with the three construction companies on tenders for maglev-related construction, the sources said.
Under the FTC’s leniency rules, companies voluntarily reporting antitrust violations escape a fine. The company that does so first will also avoid criminal charges. The leniency rule was introduced in the revised antitrust law that came into force in January 2006.
If firms voluntarily admit to their violations, fines can be exempted or reduced for up to five companies, while the first to come forward will not face criminal prosecution.
The FTC sees a plea-bargaining system as an “effective” way to shed light on the workings of bid-rigging incidents.
For example, in the alleged bid-rigging for snow-melting equipment on the Hokuriku Shinkansen Line, eight equipment construction firms that participated in the bidding were indicted in March 2014 by the Tokyo prosecutors for antitrust violations.
They were all found guilty. But the first to own up was exempted from criminal charges or a fine. Of those who came clean later, fines for three of the eight firms were reduced by 30 percent.
The maglev project has drawn attention for its likely future impact. When finished, JR Tokai will operate the world’s first train that uses superconducting magnetic levitation technology. It will travel at a top speed of 500 kilometers per hour, much faster than current shinkansen bullet trains.
The latest investigation into maglev construction tenders is a promising way to detect and expose crimes that occur behind closed doors, according to Taichi Yoshikai, professor of Kokushikan University who worked in the prosecutors’ special investigation squad.
Yoshikai also said, “Conversely, this shows that if the leniency rule or plea bargaining is not used, it would be very difficult to expose” crimes.
Yoji Ochiai, a former prosecutor and now lawyer, said that thanks to Obayashi’s voluntary admission, it is “unmistakably easier” to investigate. Still, he also called for caution.
Warning that investigations may spiral out of control or errors could be mistakenly recognized as facts, Ochiai said investigators must not forget to examine the evidence given by someone under a plea bargaining deal against other parties’ confessions and other evidence found during investigations.
A senior prosecutor was also wary, saying, “It is just about right not to base everything on plea bargaining but instead, use this if it fits well with the accumulated evidence.”