Editorials

Third-party probe of Kepco scandal

Kansai Electric Power Co.’s in-house probe of its executives’ receipt of money and gifts worth more than ¥300 million from a former deputy mayor of Takahama, Fukui Prefecture — which hosts one of Kepco’s nuclear power plants — highlighted the decades-long unusual relationship between the power company and the figure who held a powerful influence over the town until his death in March. At the same time, Kepco’s explanation over its sharply increased contracts with a local construction company with close ties to the figure — who was given information over the utility’s nuclear power-related works and was paid ¥300 million by the construction firm — is hardly convincing.

Kepco says it will launch a third-party probe by lawyers over the intransparent exchanges between the firm and the late Eiji Moriyama, to come to a conclusion by the end of the year. Such a probe must get to the bottom of whether there was collusion between the nuclear power plant operator and the influential figure in the plant’s host municipality.

Moriyama, who died last spring at 90, is said to have played a key role in facilitating the launch of the Nos. 3 and 4 reactors at Kepco’s Takahama nuclear power plant while he was serving as a senior official of the town government. The report on Kepco’s in-house probe of the money and gifts from Moriyama — compiled last year but disclosed only last week — recognized him as a powerful figure who continued to exert influence in the local community even after retiring as the town’s official.

At the same time, it portrayed Moriyama as a man who habitually rebuked, shouted at and threatened Kepco executives, and someone who should not be offended to ensure smooth operation of the Takahama nuclear power plant. Therefore, Kepco said, the company was unable to immediately decline or return the gifts from Moriyama even when the value far exceeded socially acceptable levels — two Kepco executives, including an incumbent director, received a total of more than ¥100 million each over the past several years.

Still, the report does not dispel suspicions that the gifts effectively constituted kickbacks to Kepco executives via Moriyama from the local construction company that won billions of yen in contracts from the power company in recent years. The Takayama-based construction firm, which had close ties with Moriyama, obtained Kepco’s order of ¥6.5 billion worth of works over six years from 2013 — many of the contracts without competitive bidding. An earlier probe by tax authorities of the firm found that Moriyama received ¥300 million from the company, which he failed to report as income.

Kepco has admitted that it long provided Moriyama with information, such as estimated value of its nuclear power-related works that it is planning, and suspicions linger that such information made its way to the construction firm via Moriyama, putting it in an advantage over others in winning the orders from the utility. But as to these suspicions, Kepco insists that there was nothing wrong over its contracts with the Takahama construction firm. There was no problem with providing Moriyama with the information since the values of the planned construction works were just rough estimates, Kepco says, denying that the information influenced the Takahama firm winning its contracts. The utility also argues that it does not consider the gifts from Moriyama as reward for the information provided — because he made the gifts to the Kepco executives so frequently.

Moriyama is said to have been instrumental in the launch of Kepco’s nuclear power plant in the town that suffered from depopulation with the dearth of industries to keep its youths from leaving the hometown. He reportedly cultivated his influence over Kepco by keeping the host community under his control in favor of the nuclear plant, and continued to serve as advisor to local contractors to Kepco’s nuclear power-related business. Nuclear power plant operators also try to win support of the host municipalities by creating business and jobs in the local community.

The gift-giving from Moriyama to Kepco executives is reported to have escalated after nuclear power plants across the country were shut down after the March 2011 disaster at Tokyo Electric Power Holding Company’s Fukushima No.1 plant. For Kepco, which relied more on nuclear power than other utilities, it was crucial to restart its idled nuclear plants to rebuild its finances, and a restart required the consent of the host municipality and prefecture. Of the nine nuclear power plants restarted after the Fukushima disaster, four are run by Kepco, including two reactors at the Takahama plant.

Kepco’s probe said that the utility feared antagonizing an influential figure like Moriyama could have severely affected its bid to restart the Takahama plant. What is needed is a third-party oversight as to whether relying on such a figure distorted the relationship between the nuclear power plant operator and the host municipality.