Industry minister Hiroshi Kajiyama on Tuesday rejected criticism of the government’s coronavirus-relief program amid allegations of a possible shady cash deal related to the subcontracting of government-commissioned work involving a major advertising agency.
Service Design Engineering Council in Tokyo won the bid for the government’s program for issuing cash benefits to small and midsize companies hit by the novel coronavirus at ¥76.9 billion ($712 million), and subcontracted the work of handling applications by businesses to ad giant Dentsu Inc. for ¥2 billion less.
Dentsu then re-consigned the work to temporary staffing service Pasona Group Inc. and Transcosmos Inc., which provides integrated marketing, outsourcing and call center services.
Dentsu told Kyodo News it has carried out the program in line with government regulations and there is no problem with its implementation.
The board of the council consists of eight part-time members, including those linked to Dentsu, Pasona and Transcosmos. It is widely believed that the three companies were involved in the establishment of the organization in 2016.
The minister of economy, trade and industry told a news conference that there was no issue with the execution of the program, saying “a variety of tasks were involved and they were divided” between the organization and the companies.
The industry ministry has said that, of the ¥2 billion, ¥1.56 billion was set aside to cover bank transfer fees for cash benefits and ¥120 million was for labor costs at the organization.
Under the relief program, the government will grant up to ¥2 million each to small and medium-sized companies that have seen revenue declines of 50 percent or more on a year-on-year basis, and up to ¥100,000 to individual business operators, including freelancers.
The council was consigned 14 projects by the industry ministry worth a total of ¥157.6 billion between fiscal 2016 and fiscal 2020, which started in April.
According to documents presented by the ministry to Diet members, nine of the projects were then subcontracted to Dentsu and other companies.
It had 21 employees as of Monday, including people loaned from the three companies, according to the government.
According to a group of opposition lawmakers who visited the organization’s office in Tokyo on Monday, they saw no working staff there. In addition, no one responded to a phone call made by a member.
During a hearing by the opposition bloc, ministry officials explained that the organization’s officials were working from their homes.
Opposition parties have been critical of the government, with Akira Koike, second-in-command of the Japanese Communist Party, calling for a thorough probe into the matter, saying on Monday, “It will be an extremely serious problem if a mysterious organization is ripping off the cash benefits.”
Kajiyama said the government had once commissioned Dentsu to conduct similar work overseeing the transfer of benefits from the government to recipients.
However, many recipients felt something was out of place when they saw that the money paid into their bank accounts came from Dentsu, not the government, Kajiyama said.
Because of this, the government decided to outsource the payment of the coronavirus relief fund to the organization instead of Dentsu, he noted.
Eiichi Kasahara, chairman of the council, has said he will step down from his post as his term runs out at the general meeting Monday.