Obayashi Corp., one of the country’s four largest general contractors, said Tuesday that its president, Toru Shiraishi, will step down in a bid to shake up management as the firm faces allegations of bid-rigging involving construction related to the ¥9 trillion maglev rail project.
Shiraishi, 70, will step down on March 1 and be demoted to a director. Managing director Kenji Hasuwa, 64, will replace him at the head of the construction giant.
It was also announced that representative executive vice president Kozaburo Tsuchiya, 66, who leads the firm’s civil engineering department, resigned from that post Tuesday. Tsuchiya will become a contract worker starting Wednesday, Obayashi said.
In December, the Tokyo District Public Prosecutor’s Office and the Fair Trade Commission raided the four supergeneral contractors, including Obayashi, on suspicion of violating monopoly laws.
The four firms — Obayashi, Shimizu Corp., Kajima Corp. and Taisei Corp. — are suspected of having rigged bids for some of the construction work for the maglev project for Central Japan Railway Co. (JR Tokai). The rail project aims to link Tokyo and Nagoya by 2027 and Tokyo and Osaka by 2037.
At a news conference, Shiraishi declined to answer when asked if the company actually engaged in bid-rigging.
“We are fully cooperating with the investigation and we cannot comment on something that could affect the substance of the investigation,” he said.Shiraishi was also asked if his resignation equals the admission of playing a role in the alleged bid-rigging. Shiraishi again didn’t answer, emphasizing that the aim of his resignation was instead to “renew the top management.”
Asked what measures Obayashi will take to prevent bid-rigging by its workers, Hasuwa, who attended the same news conference, said only that the company will consider measures after the authorities finish their investigation and facts are made clear.
Shiraishi will be further demoted to an adviser role after a planned general shareholders meeting in June, Obayashi said.
Some media reports have said that Obayashi and Shimizu have already admitted to investigators that they colluded to decide which firm would win certain bids in advance, while Taisei and Kajima have denied such allegations.
Monday was the deadline for applying for leniency under the Antimonopoly Act, which would cut levies by 30 percent and have the Fair Trade Commission drop criminal accusations against them if the bid-riggers voluntarily admit their wrongdoings.
Obayashi has reportedly applied for leniency. Although Shimizu initially denied the accusations, it apparently decided to ask for leniency, according to the Asahi Shimbun.
Shiraishi became president in 2007 after serving as managing director and head of the firm’s architectural business department.
Hasuwa took the position of managing director in 2016 after heading the firm’s renewable-energy-related business.
Illegal bid-rigging for public works projects was considered rampant until top executives of a number of large general contractors were arrested by Tokyo prosecutors in 1993.
The arrests were particularly shocking to the public because those construction firms had close relationships with influential politicians and provided political funds for them.
In 2005, the four supergeneral contractors, including Obayashi, declared publicly that they would no longer engage in bid-rigging. At the time, the Fair Trade Commission was ready to drastically beef up its legal power to crack down on such illegal practices.
The alleged bid-rigging by the four firms this time around has surprised the public particularly because, if true, their actions since the 2005 declaration ran counter to their pledges. meant they didn’t stop the malpractice despite the 2005 declaration
In 2006, Obayashi drew up a set of internal rules to have workers fully comply with the law and thereby prevent bid-rigging.
Shiraishi said now he feels “ashamed” because the firm “has caused a disturbance to the public” despite the 2006 rules. He declined to elaborate.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.