Japan’s Infrastructure Ministry has imposed a one-month suspension on the Nishida Kosan KK construction company, whose majority owner, the former home affairs minister Mamoru Nishida, was found guilty of making US$3M from illegal sub-contracting work on a recent tunnel contract.
The Public Works ministry has also prohibited the company from bidding for any new contracts for a period of two months, while the Aichi Prefecture government imposed a four-month ban for the same reason. Although not seeming overly damaging, in reality, the adverse effect to the company’s overall reputation could prove much more serious.
In 1997, the Aichi Prefecture awarded the US$15M Suda tunnel-building contract to Hotta Kensetsu KK, which then allocated a substantial part of this work to Nishida Kosan for a price of US$12M. This company then proceeded to illegally subcontract the actual project construction to Tokyo-based Wakachiku Construction Company, paying just US$9.9M, with just a single Nishida Kosan employee allocated to the actual construction site.
Japan’s Construction Industry Law specifically forbids this type of profit-making subcontracting. Not only was Mamoru Nishida’s company suspended from bidding for state work, but the Infrastructure Ministry also imposed similar sanctions on Wakachiku, which knowingly accepted what it knew to be illegal work, while Hotta Kensetsu was also punished for not reporting to the Prefecture its decision to use subcontractors.
Mamoru Nishida has vehemently denied any illegal actions, saying at a recent press conference, “I have never met anybody of Wakachiku Construction.”
