by Ban Hideyuki, CNIC Co-Director<\/p>\n\n\n\n
Kansai\nElectric Power Co. (Kanden) has disclosed that 20 officials, mainly in its\nnuclear power division, received money and gifts worth more than 300 million\nyen from Moriyama Eiji, the late former deputy mayor of Takahama Town, Fukui\nPrefecture, which hosts KEPCO\u2019s Takahama nuclear power plant. Those who\nreceived the gifts include the utility company’s Chairman Yagi Makoto, former\ndirector of its nuclear power division Toyomatsu Hidemi, and the division’s\ndeputy director Suzuki Satoshi. The gifts were given in various forms, such as\nJapanese yen, U.S. dollars, gold coins, and vouchers for tailored suits. Kanden\nannounced this at a news conference on September 27, 2019.<\/p>\n\n\n\n
The\nmoney originated from Yoshida Kaihatsu, a construction company based in\nTakahama that had received contracts from Kanden. This company paid the amounts\nto Moriyama as rewards, and he donated the money to the Kanden officials later.\nThese payments were made behind the scenes, which means that the money was\noff-the-book, under-the-table cash.<\/p>\n\n\n\n
Moreover,\nadditionally collected data have revealed that Yoshida Kaihatsu and Yanagida\nSangyo, a maintenance service company based in Takasago, Hyogo Prefecture, for\nwhich Moriyama served as advisor, as well as several security companies he set\nup jointly with Kanden, received large numbers of contracts, totaling more than\ntwenty billion yen, from the utility during the past five years. It was also\ndisclosed that these security companies including Oing and Ivics and the other\njoint ventures handed cash and gifts directly to the Kanden officials without\nany involvement by Moriyama. As a result, the combined amount of such questionable\ncash and gifts far exceeded the 300 million yen mentioned above. <\/p>\n\n\n\n
Kanden’s top officials were forced to disclose this scandal in a press conference because the Tax Agency’s Kanazawa office conducted an investigation into Yoshida Kaihatsu in January 2018. This investigation revealed that the construction company paid large amounts of money to Moriyama, which prompted the Tax Agency to conduct investigations into both Moriyama and Kanden. In an attempt to justify their position, the utility’s executives explained to the tax investigators that they kept the money only temporarily, and returned part of the funds to Moriyama. As for the remaining funds, which were determined by the tax investigators to be income, the utility officials filed the final tax returns and paid the imposed tax. Kanden then set up an in-house compliance committee, which conducted a fact-finding investigation into the irregularities and punished its chairman and other officials by cutting their salaries or by imposing other forms of punishment. On September 11, 2018, the committee compiled its investigation report, but the utility did not disclose the report to the public. However, there was a surprising development later when a whistleblower, who called himself a member of a group for improving the Kanden organization, leaked information about the scandal to the Kanden president, the Tax Agency, mass media, citizens’ groups opposing nuclear power generation, and others. Confronted with this situation, the utility executives had no choice but to abandon their policy to conceal the scandal and were forced to disclose the details in the news conference.<\/p>\n\n\n\n
Moriyama was one of those who aggressively promoted construction of Unit 3 and Unit 4 of the Takahama nuclear plant. He served as deputy mayor of Takahama Town for about ten years until 1987, when he retired and became an adviser to Power Plant Services, a fully-owned subsidiary of Kanden. He also served as counselor for Yoshida Kaihatsu at the same time. This means that he exerted great influence on both the contractees and the contractor. Although the utility asserts that its order-issuing process was appropriate and fair, the fact that Moriyama represented both sides constituted a conflict of interest and gives rise to suspicion about fairness. Kanden, on the other hand, seems to have actively taken advantage of Moriyama to win consent from local anti-nuclear residents. <\/p>\n\n\n\n
The Tax Agency’s investigation does not cover periods that go back more than seven years. Meanwhile, the period when Moriyama served as an advisor for a subsidiary of Kanden was much longer, around 30 years. Indications are that the cozy relations between Kanden and Moriyama might have continued for a long time, along with the flow of off-the-book funds from the deputy mayor to the utility.<\/p>\n\n\n\n
The\nMinistry of Economy, Trade and Industry (METI) claims that they had no\nknowledge of the 2018 report on Kanden\u2019s in-house investigation concerning the\nflow of gifts and cash from Moriyama to its executives until Kanden held the\npress conference in September 2019.<\/p>\n\n\n\n
Despite\nthis comment, it has recently been disclosed that METI has been seconding its\nofficials to the Takahama Town office regularly since 2008. At present, the\nfourth official is on loan to the town office. Former METI Minister Sugawara Kazuhide\nadmitted this in the lower house’s Budget Committee questioning session on\nOctober 11, 2019. He resigned from the post later, on October 25. <\/p>\n\n\n\n
The\nyear 2008 was when the plan to introduce MOX (mixed plutonium and uranium\noxide) fuel to the Takahama nuclear plant first surfaced. In September 1999,\nlocal residents discovered the falsification of safety data on the MOX fuel\nmanufactured by Britain\u2019s BNFL for use in Takahama Unit 3, and waged a strong protest\nagainst the project. Confronted with this situation, METI transferred an official\nto the Takahama Town office to strengthen ties with former Takahama Town deputy\nmayor Moriyama and Kanden in an attempt to promote the MOX operation as a\nnational project. In 2010, two years after METI had begun transferring officials\nto Takahama, the ministry’s efforts produced favorable results and Takahama NPP\nbegan to use MOX fuel.<\/p>\n\n\n\n
Considering\nsuch close relations between METI, Moriyama and Kanden, we can hardly believe\nthat the ministry remained ignorant of the Tax Agency’s investigations into\nYoshida Kaihatsu in January 2018, or the ensuing searches of both Moriyama’s\nhouse and Kanden premises.<\/p>\n\n\n\n
Some\nDiet members have repeatedly demanded that Kanden participate in parliamentary\ndeliberations and joint hearings by the ruling and opposition parties on this\nscandal, but the utility flatly refuses to comply with their demand. This\nshould be handled by METI, because it is within the ministry’s jurisdiction.\nBut the only thing the ministry did was to say that they would convey the\nlawmakers’ demand to Kanden. METI does not show any signs of forcing the\nutility to meet this demand, apparently because they want to defend Kanden. The\nministry insists that it has ordered Kanden to conduct hearings of its\nofficials concerned in the scandal before compiling its investigation report,\nand that they are waiting for the arrival of the report. Meanwhile, Kanden says\nit will set up a third-party committee chaired by Former Attorney General\nTadagi Keiichi that will conduct investigations into the scandal and compile\nthe investigation report. The committee is scheduled to complete the report in\nDecember, but it is predicted that the report will be come out in the new year since\nthe scope of the committee’s investigation will cover a large number of people.\nMETI says it wants to wait until the report is completed before taking any\naction.<\/p>\n\n\n\n
Amid this situation, a preparatory meeting for the projected \u201cenergy research committee\u201d was held in the Diet on October 31 and economist Kaneko Masaru and former METI official Koga Shigeaki were invited. This meeting was organized by a group of ruling and opposition party members demanding establishment of a formal parliamentary committee that will deliberate on such matters as Japan’s Basic Energy Plan. Professor Kaneko maintained that the third-party committee organized by Kanden itself cannot be considered genuinely \u201cthird party,\u201d and that the third-party committee should be set up by METI. This demand was also voiced by a participant in the joint hearing on the scandal organized by the opposition parties. METI, however, is obstinately ignoring this demand. Professor Kaneko also pointed out that during the 2012-2015 period former trade minister Seko Hiroshige received political donations totaling six million yen from Yanagida Sangyo, the maintenance service company for which Moriyama served as an advisor. This means that the off-the-book money was funneled back not only to Kanden but also to METI. Additionally, Koga hinted at the possibility that some Diet members might have received questionable gifts and money from companies linked to Moriyama.<\/p>\n\n\n\n
Kanden’s\nstance in the September 11 report was to strongly emphasize Moriyama’s\nhair-trigger temper and claim that it was impossible for the utility executives\nto return the gifts and money to him. This excuse makes it sound as though\nMoriyama was to blame and not the Kanden executives.<\/p>\n\n\n\n
In\nany case, there is no reference to why and how the compliance committee was set\nup for the in-house investigation. Since the chairman and the top officials of Kanden’s\nnuclear power division had received the gifts and money, it is difficult to\nimagine that they organized the committee and compiled the report for the sake\nof the company employees. Although METI categorically denies the view that the\ncommittee was established for the purpose of submitting its report to the\nministry, it would be natural to presume that that was what was happening. It\nis quite certain that as soon as they learned that the agency had launched the\ntax investigation, METI pressed Kanden to deal with the Tax Agency’s\ninvestigation and to work out measures to prevent recurrences.<\/p>\n\n\n\n
On\nOctober 24, a citizens’ group was launched to demand that KEPCO be charged for its\nillicit money transactions and the group is currently trying to recruit as many\nas 1000 people who wish to participate in a class action lawsuit against the\nutility. They plan to file a lawsuit against Kanden with the Osaka District\nCourt in December. This is a new move, emerging from the citizens\u2019 side, aimed\nat demanding a thorough investigation of the Kanden scandal, and it may give\nmomentum to the moves already organized.<\/p>\n\n\n\n
The\nbasic reason why this cozy relationship emerged between the electric power\ncompany and the local town official was that the nuclear power plant is an\nunwelcome facility for local governments. In the 1970’s, no sites were\navailable for building new nuclear power plants and the utilities had no choice\nbut to build more nuclear reactors within the premises of their existing plants.\nSince local residents do not approve of the existence of the nuclear plant in\ntheir community, the utilities are being forced to take measures to alleviate\nthe residents\u2019 feelings of aversion. One such measure taken by the utility this\ntime was to appoint an influential local person to the post of executive or\nadviser of the utility’s subsidiary, and another measure was to donate massive\namounts of money to the person or to entertain him repeatedly. For these\npurposes, KEPCO used off-the-book funds. In 1974, the government introduced a\nsystem to allocate subsidies to local governments that allowed electric power\nutilities to build nuclear power plants or other types of electric power\ngeneration facilities in their community. This system was also aimed at easing\nlocal residents\u2019 reluctance to accept such facilities. The then Minister of\nInternational Trade and Industry, Nakasone Yasuhiro explained it in this way in\nthe Diet deliberations on the relevant bill.<\/p>\n\n\n\n
The\nreason why Kanden was easily able to create off-the-book funds is that the\nutility is adopting an electricity-rate calculation system called the \u201coverall\ncost method.\u201d Under this system, the electricity rate is calculated by adding\nan appropriate amount of profit to the overall cost. This is the system generally\nused for calculating utility charges. Although electric power companies are private\nfirms in Japan, they are allowed to monopolize the electric power supply\nbusiness in each district. METI is checking their business operations, but it\nis impossible for the ministry to check the validity of the price in each\ncontract. This enabled the utility to include kickback funds in their contract\nprices. Thus consumers are being forced to pay for illicit money, as it is passed\non to their electricity rates.<\/p>\n\n\n\n
A\nnovel entitled “Tokyo Blackout” was published in 2014. The author of\nthis novel is said to be an incumbent METI official whose penname is Wakasugi\nRetsu. The story describes the trick of creating off-the-book funds. According\nto the author, utilities place an order at a price 20% higher than the market\nprice, and force local businesses to funnel back the profits. He pointed out\nthat the illicit funds are distributed not only to the utility itself but also\nto the Federation of Electric Power Companies, local governments, Diet members,\nand many others. The author dubbed this system the “Electric Power Monster\nSystem.” The Kanden scandal has unveiled a part of this monster system.<\/p>\n\n\n\n
Kanden’s\nthird-party committee is scheduled to publish its report early in 2020. We would\nlike to observe closely METI\u2019s response to the report, Diet members\u2019 moves, and\nfuture developments involving lawsuits against the utility. In the current\ncircumstances, where liberalization of the electric power supply business is\nexpanding, we would like to create popular movements to stop the illicit ‘nuclear\nmoney’ that is hampering the progress of liberalization.<\/p>\n","protected":false},"excerpt":{"rendered":"
by Ban Hideyuki, CNIC Co-Director Kansai Electric Power Co. (Kanden) has disclosed that 20 officials, mainly in its nuclear power division, received money and gifts worth more than 300 million yen from Moriyama Eiji,...<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[90],"tags":[],"class_list":["post-4685","post","type-post","status-publish","format-standard","hentry","category-economics-of-nuclear-power"],"acf":[],"_links":{"self":[{"href":"https:\/\/cnic.jp\/english\/index.php?rest_route=\/wp\/v2\/posts\/4685","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cnic.jp\/english\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cnic.jp\/english\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cnic.jp\/english\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/cnic.jp\/english\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4685"}],"version-history":[{"count":2,"href":"https:\/\/cnic.jp\/english\/index.php?rest_route=\/wp\/v2\/posts\/4685\/revisions"}],"predecessor-version":[{"id":4704,"href":"https:\/\/cnic.jp\/english\/index.php?rest_route=\/wp\/v2\/posts\/4685\/revisions\/4704"}],"wp:attachment":[{"href":"https:\/\/cnic.jp\/english\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4685"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cnic.jp\/english\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4685"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cnic.jp\/english\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4685"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}