Flying pig alert
Kyodo via Crisscross: Major construction firms to join forces to stop bid-rigging

TOKYO — Major construction firms will join forces to eliminate bid-rigging with the revised Antimonopoly Law to take effect Jan. 4, mandating harsher penalties for offenders, sources familiar with the matter said Thursday. The joint action was decided as a result of a series of talks held since around last fall by Kajima Corp, Taisei Corp, Obayashi Corp, Shimizu Corp and other major general contractors on the law revision, the sources said. These contractors will try to establish a system for compliance with relevant laws by taking such measures as frequently changing officials in charge of securing orders for construction projects, they said.

I can't even begin to say what I could contribute to this thread...

Best thread title of 2005? Top ten? This one's certainly a contender.

-dingosatemybaby
-best new year's wishes

dingosatemybaby wrote:Best thread title of 2005? Top ten? This one's certainly a contender.

I agree. Perfectly captures the Japanese psyche and the irony of the story.

I can just picture a conversation from one of their regular meetings:

Former Bid-Rigger#1: As an honest and respectable businessman, I can certainly not tell you that our bid for the Obaba expressway extension is 240.657999999 billion yen.

Former Bid-Rigger #2: (furiously gesturing numbers hand signals while talking) Yes it would definately be a naughty thing to do.

Former Bid-Rigger #3*: Well the bill for lunch appears to be 260.9 billion er.. 5,500 yen.

et.al.

Does anyone know what the Antimonopoly Law actually covers? Is it just government jobs? Or are private companies required to follow it as well?

For example, Roppongi Hills. Couldn't Mori have given out the construction work to whomever and at whatever price he wanted?

Captain Japan wrote:...For example, Roppongi Hills. Couldn't Mori have given out the construction work to whomever and at whatever price he wanted?

Mori can give out business to any firm (and pay whatever price) but if he puts work out to tender and firms collude on pricing then they breach the antimonopoly law. What is unclear is if the customer has to be a complainant.

Asahi: 4 biggest contractors agree to end bid-rigging

..."This is a coup from the top down," groaned one employee who has been in charge of tender "adjustments" at one of the four builders. Another lamented: "The times have changed. There is no way out this time around. If we act against the FTC, we will surely face a crackdown as a lesson to others. Then our company must go belly up"...

Mulboyne wrote:

Captain Japan wrote:...For example, Roppongi Hills. Couldn't Mori have given out the construction work to whomever and at whatever price he wanted?

Mori can give out business to any firm (and pay whatever price) but if he puts work out to tender and firms collude on pricing then they breach the antimonopoly law. What is unclear is if the customer has to be a complainant.

Right. So then it comes down to whether Mori is agreeable to his project being bid-rigged. I'm sort of mixed up in this sort of situation myself and I'm interested in the answer. I mean, what if he thinks that letting the bid-rigging go (maybe because it is such a standard way of doing things)will somehow benefit him? In other words, if a true tendering system were used, the project might be delayed, the quality would suffer, etc. because new players would be getting jobs they wouldn't normally get?

So I guess my question is this: if all parties (the contractors and owner) are silently accepting of the bid-rigging practice (with the tender being just a silly formality), is this still somehow illegal?

Captain Japan wrote:So I guess my question is this: if all parties (the contractors and owner) are silently accepting of the bid-rigging practice (with the tender being just a silly formality), is this still somehow illegal?

The question is of course, rhetorical. Government bidding excluded because that is in a world of is own, if an owner seeks private construction it is simply a soudan! He gets a couple of estimates and goes with whichever he likes best.

However, if the owner opts for the submission of bids for a contract, then it must be conducted by the appropriate statutes of contracting. So if someone is precluded or cut out of the bidding unfairly, it is more than likely illegal. This is the purpose of the Dango obviously. As an elementary expanation, the Dango assigns each incoming contract to whichever member whose turn it might be and the other Dango members make appropriately higher bids. This way they keep the contract out of the hands on non-dango members and rotate the incoming contracts among themselves! If a non-Dango member gets too noisy, they will give him a sub-contract with the understanding that he shut up or never get any work from any of the main players again, which would be the kiss of death to his company, so he complies and the Dango rolls merrily on.

They have made similar type announcements in the past; to wit that they would straighten up and fly right; however, these were usually (of course) right after a major scandal and were at best, short lived in straight flight duration. It was then right back to business as usual.

I can see the same thing happening here. All good intentions (quote unquote) and and once the clouds have cleared, right back to the Dango!

This Vox Populi Vox Dei from the Asahi starts off promisingly:

It was in late December that I read in The Asahi Shimbun that general construction contractors had agreed "to stop bid-rigging." I was rather amused at the irony of this statement, thinking, "So, they are colluding to stop collusion. Hmmm." Now prosecutors have made arrests in suspected bid-rigging on projects ordered by the Defense Facilities Administration Agency. It is another in the unending slew of scandals involving government bureaucrats colluding with business.

And then ends in shoganai:

At times like this, I desperately look around for something solid and honest to believe in, something as far removed from profit-seeking competition as one can get. Take for example a humble bowl of blanched spinach on the breakfast table. Imagine a smallish bowl filled with a generous serving of greens...A world ruled by numbers and profit is just too suffocating to contemplate. That is what I was thinking as I nibbled on my spinach.

FTC raids Tokyo Gas, others over alleged bid-rigging
Mainichi

Japan's Fair Trade Commission on Tuesday raided some 20 companies, including major gas supplier Tokyo Gas Co., on suspicion of rigging bids for government-aided projects for natural gas stations that service eco-friendly cars.
Among other companies raided by the antimonopoly watchdog are Osaka Gas Co. and Toho Gas Co. Subsidiaries of the three gas firms, including Tokyo Gas Energy Co., Osaka Gas Engineering Co. and Toho Gas Engineering Co., were also raided.
According to sources familiar with the investigations, the subsidiaries of the three gas firms are alleged to have repeatedly prearranged bids to win orders to construct the eco-friendly gas stations, known as Eco Stations, after competitive bidding was made compulsory in fiscal 2002....more...

Kajima, Japanese Builders' Shares Gain as Construction Booms
Bloomberg

Sept. 5 (Bloomberg) -- Regulators forced Japan's four largest construction companies, including Kajima Corp., to suspend operations in May for bid rigging. Investor Atsuto Sawakami snapped up the stocks as they slumped, and the purchases are paying off.

Of the 542,000 licensed companies chasing Japan's $458 billion construction market, only the biggest are able to build the factories and office towers that are springing up as the nation enjoys its longest economic expansion in almost six decades. Smaller firms may be swallowed up or go out of business.

``I bought a lot of big contractor stocks when they dived in June and July,'' said Sawakami, who manages $1.7 billion as president of Sawakami Asset Management Inc., including Shimizu Corp., Obayashi Corp. and Taisei Corp. shares. ``The market is getting slimmer and fitter. The big guys will be left with the world's largest construction market in five to 10 years.''...more...

Back in the height of the bad loan "crisis" there were over 500k construction companies in Japan. Construction cos. were allegedly the biggest bad loan group of the bunch. And so now there are still over 500k of these deadbeats around after the bad loan mess was supposedly cleaned up?

Brother of governor held over rigged bids
Asahi

FUKUSHIMA--The younger brother of Fukushima Governor Eisaku Sato was arrested Monday in connection with a bid-rigging scandal for sewage system projects commissioned by the prefectural government.

Yuji Sato, 63, was arrested along with Koichi Sakamoto, 65, a former Fukushima prefectural government official in charge of civil engineering, and Susumu Kadowaki, a former deputy branch manager for Tokyu Construction Co.

Yuji Sato is president of a local clothing company.

What the hell?

They said Tsuji contacted construction companies interested in the project and tried to coordinate which company would win the contract. Investigators believe Tsuji conferred with Sato in this matter.

Suspicions about the bid-rigging scheme came to light during an investigation into possible tax evasion by Mizutani Kensetsu Co. of Kuwana, Mie Prefecture.

Mizutani Kensetsu had business dealings with the tailoring company headed by Sato, investigators said.

Oh, he must have been stitching the firm's uniforms. Read the confusing mess in its entirety here.

Bid-rigging rampant in ODA
Daily Gomiuri

Bid-rigging in ODA projects is running rampant, with more than 80 percent of the successful bids for 71 construction projects coming within 1 percent of the estimated costs, an investigation by The Yomiuri Shimbun has showed.

The problem of fixed bids for projects funded by nonrefundable official development assistance grants is a continuing one, according to general contractor employees.

Domestically, a government crackdown has resulted in a decline in the successful bidding ratio--the percentage of successful bid prices to initial estimates. But the ratio remained high for ODA projects, even as recently as fiscal 2004....more...

One thing this article misses is the systematic corruption within the consulting industry. How is it possible for these contractors to consistently place their bids so close to the budget? Someone is leaking them the budget. And that someone would be the consultant (likely an architect responsible for designing the project). Lots of times the consultants require the contractors to do their work for them in order to receive preferrential treatment when it comes time to tender. Another thing the article misses is that the budgets are hopelessly inflated to begin with. This thread has a bit on how that works.

Captain Japan wrote:How is it possible for these contractors to consistently place their bids so close to the budget? Someone is leaking them the budget.

Hell Capt'n, as you well know, they won't even send out the IFBs until all contrators have acknowledged the budget figures and have had a chance to meet a couple of times to decide their bids and whose turn it is to win the contract. Makes it more fair that way!

In bidding probe, ex-Wakayama treasurer kills self
Japan Times

WAKAYAMA (Kyodo) A former Wakayama prefectural treasurer who was undergoing questioning as part of a bid-rigging probe was killed by a train in an apparent suicide Wednesday, police said.

Nobuo Nakanishi, 71, had been voluntarily questioned by prosecutors since October about bid-rigging in connection with a public works project.

Wakayama Gov. Yoshiki Kimura has stepped down over the scandal.

Nakanishi's last interrogation was Tuesday, sources said.

No suicide note was found, but police said they believe it was a suicide because the train driver saw Nakanishi standing on a grade crossing and blasted the horn, but the man merely turned to look at the train and did not move....more...

Whatever happened to a MAN's suicide? Cut out the seat of your soul; a little hara-kiri. Now it's all basejumping, trainspotting, hanging like a crook (poetic justice perhaps)...