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Construction Companies Bid-rigging in Japan : Corruption Case


In July 2002, a Japanese district court confirmed that it seemed likely that construction companies had rigged bids for construction orders from the US Atsugi navy base, south-west of Tokyo.

However, the Tokyo court rejected compensation claims for Y680m made by the US government against the 26 builders, saying there was inadequate evidence to prove that collusion occurred with each specific construction project.

The US has made similar accusations about bidding at other military bases, but this was the first time that a court made a ruling on the issue.

The US government launched a lawsuit in 1994 against 53 construction companies, including Tokyo-based Nishimatsu construction and Maeda Construction. Twenty-seven settled out of court.

The judge said that collusive behaviour was evident in 70 of the 98 cases in question, but noted there was inadequate evidence to determine compensation payments be made.

Bid rigging - known as dango - in Japan's construction industry is understood to be rampant, particularly for government-funded projects where officials disclose bidding prices to builders in exchange of favours.

Earlier the same month, seven Tokyo-based construction companies were suspended from business after passing on public work projects to one another while skimming margins without doing any construction work.

The US has long been critical of the industry for these practices and for being closed to foreign builders. In its annual recommendations to the Japanese government, Washington has recommended Tokyo to address the widespread problem of bid-rigging, particularly bureaucrat-led bid rigging.

The recommendations said: "Such a program (of reform), if implemented successfully, could reduce public work outlays by 30 per cent and free resources for employment creating initiatives, in line with Prime Minister Koizumi's key priority of expanding the social safety net."


The following lists all references contained in our database that are relevant to this briefing
Financial Times [7/15/2002] 'Japanese builders accused of rigging bids' by Ken Hijino in Tokyo [Source ID = 6999]


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