National | VIEW FROM OSAKA

Kepco's gift scandal casts shadow over Kansai and 2025 Expo

by Eric Johnston

Staff Writer

Earlier this fall, it was revealed that 20 Kansai Electric Power Co. officials, including the chairman and president, received nearly ¥320 million in cash and presents between 2006 and 2018 from a powerful, and now deceased, former deputy mayor and political fixer in Takahama, Fukui Prefecture.

The gifts appeared to have been given in exchange for nuclear power-related contracts for a company the late politician was close to.

Long ago, this practice conducted between utility officials and local towns hosting nuclear power plants was considered common, and most likely would have created little fuss. Not this time. Kepco’s chairman and other executives were forced to resign and once again, the dark and dirty side of the nuclear power industry was exposed. Kepco, in particular, is arguably the nation’s most aggressively pro-nuclear power company. The first two nuclear power reactors to go back online after the triple Fukushima meltdown in March 2011 were Kepco reactors in Oi, Fukui Prefecture, which were fired up in the summer of 2012.

The payoff scandal has anti-nuclear groups and renewable energy advocates hoping it will derail the start of more Kepco reactors and force the company to reform and turn to renewable energy sources or even natural gas. But in Kansai, there are concerns about how it will affect Kepco’s power, and not the nuclear energy kind.

Kepco is, in fact, the so-called 500-pound gorilla of Kansai’s political and economic worlds. Its influence on Kansai’s policy decisions is immense, though difficult to pin down analytically. The utility doesn’t just provide cities like Osaka, Kyoto, Nara and Kobe their daily energy fix. It has great power in influential local business organizations like the Kansai Economic Federation, where two of the last four chairmen have been Kepco heads. Through local business lobby groups, Kepco gets involved, directly or indirectly, with planning decisions involving public works projects that require local and central government funding, such as Kansai International Airport.

Kepco also backs major one-time events designed to raise Kansai’s international profile, like Osaka’s failed 2008 Olympic bid or the successful effort to host the 2025 World Expo. Then, depending on your perspective, Kepco’s executives either solicit or shake down other Kansai-based firms for so-called voluntary donations to help pay for it. Over a decade ago, well-known management consultant Kenichi Ohmae blasted these efforts as “festival economics” that were likely to stick taxpayers with the bill after the party was over.

Kansai’s business community is already worried about costs for construction work needed for Osaka’s latest such festival, the 2025 Expo. Officially, Japanese businesses nationwide, and especially in Tokyo, are being asked to help foot the bill. But the reality is that Kansai’s business and political communities expect Kepco to play a leading role in getting Osaka and Kansai-based firms to cough up a large portion of the funds needed for the expo.

Now, with Kepco distracted by the payoff scandal, and with the nation’s corporate and political world focused on making sure the 2020 Tokyo Games take place without incident and not thinking much, if at all, about 2025, Kansai is worried there will be a local leadership vacuum next year, resulting in fewer corporate donations and other forms of support for the expo. That, in turn, could affect planning and preparations for the event.

But Kepco has a massive amount of influence in the local political and business communities, and a tight relationship with the country’s nuclear power lobby, including the Ministry of Economy, Trade and Industry, which is playing an influential role in coordinating the 2025 Expo. So it’s equally, if not more likely, that Kansai’s 500-pound gorilla will soon be back in a leadership position, beating its chest and roaring for smaller, less politically powerful firms to support the expo and other major public works projects that it favors.

View from Osaka is a monthly column that examines the latest news from a Kansai perspective.