The revelation that Kansai Electric Power Co. executives had received a total of ¥320 million in money and gifts from a former deputy mayor of a town hosting one of its nuclear power plants has raised suspicions of collusive ties between a nuclear plant operator and host municipality. Kepco insists that no favors were provided in return for the gifts, but the former deputy mayor had in turn been paid ¥300 million from a local construction firm that won at least ¥2.5 billion in Kepco’s nuclear power plant-related contracts. The power company needs to disclose all relevant facts in the case, which casts doubts over transparency in the nuclear power business.

Eiji Moriyama, who died in March at the age of 90, was known as an influential figure in Takahama, Fukui Prefecture, who developed close ties with Kepco while serving as deputy mayor of the town — the site for the firm’s Takahama nuclear power plant — for a decade through 1988. After retiring as a town official, he served as both executive and advisor to contractors of Kepco’s nuclear power plant operation, and there are reports that he may have wielded influence in winning orders from the firm.

Moriyama’s gift of money and expensive goods to Kepco executives reportedly came to light in a tax authorities’ probe into a Takahama-based construction firm, which has multiplied its sales in recent years by winning contracts from Kepco, including ¥2.5 billion worth of business from 2015 and 2018. It was learned that the firm had paid ¥300 million as a “commission fee” for obtaining Kepco’s orders to Moriyama, who in turn was found to have provided the money and gifts to the power company’s executives. Moriyama, who had not reported the ¥300 million in income, is said to have told the tax authorities that he gave the gifts as a token of his appreciation for Kepco’s support of the town.

In admitting that 20 people at the power firm, including its top executives, had received ¥320 million in gifts over seven years from 2011, Kepco President Shigeki Iwane said the firm does not believe the gifts from Moriyama were a kickback for the contracts awarded to the local construction firm. No favors were given in the awarding of the contracts, and the amount and process of the orders were all appropriate, he said.

A power company engages in a public service that supports the foundation of people’s lives and economic activities, and a high degree of fairness and transparency is required in its operation. The fact that such a gift was secretly given to the Kepco executives by a figure with close ties to the firm over an extended period is a problem. Iwane said the executives tried to turn down or return gifts that “exceeded the range of common sense,” but could not do so because Moriyama strongly refused. Four of the six Kepco executives whose receipt of gifts from Moriyama became known through the tax probe are said to have returned all or part of the gifts immediately after the tax probe began last year.

Iwane said Kepco executives hesitated to refuse or return the gifts from Moriyama because he was a man of influence in the host municipality and they feared that rejecting the gifts might endanger their relationship with him and negatively affect the firm’s nuclear power operation in the town. Such a statement itself seems to highlight the lack of transparency in the dealings between the nuclear power plant operator and powerful figures in the local communities that host plants.

There are difficulties involved in selecting the site of a nuclear power plant, such as anticipated opposition from local residents. Unlike other power utilities that are built close to big cities that consume the electricity they generate, nuclear power plants are built in remote areas through the cooperation of host communities and the use of government grants and subsidies, which prove to be key sources of fiscal income for local municipalities that often lack other industries to sustain their finances. The operators of nuclear plants also try to win support of the host communities by awarding contracts to local businesses.

The revelation of gifts to the Kepco executives raises suspicions that powerful figures in the host community influence the flow of money linked to the operation of nuclear power plants and that some of the funds may be channeled back to executives of the power company. The Kepco executive who received the largest amount of gifts is said to be a former vice president who had earlier served as director of the firm’s nuclear power business and was in charge of dealing with the host communities of nuclear plants. The Ministry of Economy, Trade and Industry ordered Kepco to conduct a probe and report whether similar practices have taken place in connection with other nuclear plants run by the firm. Kepco needs to get to the bottom of the case and publicly disclose its findings.

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