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Japan Nuclear Scandal Deepens as Chairman Admits to Taking Gifts Since 2006

Japan Nuclear Scandal Deepens as Chairman Admits to Taking Gifts Since 2006

(Bloomberg) -- A Kansai Electric Power Co. executive at the center of a payoff scandal in Japan said he took cash and presents five years earlier than the company had initially admitted, another blow to the utility’s credibility and further sapping public opinion toward nuclear power.

The Kansai scandal erupted last week, when it was revealed the utility took payments from a local company that worked on its nuclear plant in Takahama, via one of its former deputy mayors. On Friday, President Shigeki Iwane said 20 company officials took cash and gifts worth about 320 million yen ($3 million) from the official. The utility’s shares plunged the most in more than three years on Monday.

Japan’s nuclear power industry has fought an uphill battle since the 2011 Fukushima meltdown to restore the nation’s confidence, despite support for the technology from Prime Minister Shinzo Abe’s government. Public opinion has consistently been opposed to restarting the nation’s fleet of reactors, once the biggest source of atomic power in Asia, as trust in the industry and regulators hasn’t recovered from the disaster.

Timeline of events from company statements and domestic media:
  • 1970-1985 - Kansai Electric builds four nuclear reactors in the town of Takahama, Fukui prefecture
  • 1977-1987 - Eiji Moriyama serves as deputy mayor of Takahama
  • 2006-2010 - Chairman Makoto Yagi receives money and goods from Moriyama
  • 2011-2018 - 20 company officials receive 320 million yen from Moriyama, according to President Shigeki Iwane
  • 2015-2018 - Yoshida Kaihatsu, the company that paid Moriyama, won contracts worth at least 2.5 billion yen for work at Kansai’s plants, according to Kyodo
  • Sept. 2018 - Kansai uncovers the payments
  • March 2019 - Moriyama dies
  • Sept. 2019 - Kansai officials admit to receiving gifts and money after local reports

Over the weekend, Chairman Makoto Yagi told local media, including the Asahi newspaper and national broadcaster NHK, that he received money and goods over four years starting 2006. That revelation clashes with the timeline given by Iwane, who said the payments started in 2011. Kansai has scheduled another press conference on the issue for Wednesday at 2 p.m. local time.

The Osaka-based company lost 8% Monday, the most since March 2016, to close at 1,208.5 yen. The benchmark Topix index slipped 1%. The scandal could hurt the company’s chances of restarting three of its currently idled reactors, analysts at Nomura Securities Co. said in a note Monday, which would erode profits and raise fuel costs.

Japan Nuclear Scandal Deepens as Chairman Admits to Taking Gifts Since 2006

Japan’s Kyodo reported that the payments originated from a company called Yoshida Kaihatsu, which saw its sales rise about six-fold in five years through 2018. Kansai said the payments were inappropriate but not illegal. The Japanese government will start a “thorough investigation” into the industry, Chief Cabinet Secretary Yoshihide Suga said Friday, though he added Monday that no decision had been made about investigating other utilities.

Yagi held a senior role in the utility’s nuclear power division from 2006, and became head of the section in 2009, according to Kyodo. The payments came from Eiji Moriyama, a former deputy mayor of Takahama, the site of a Kansai nuclear plant. Moriyama died in March.

Yagi told the Asahi that Moriyama was a very powerful local figure, and support of Takahama’s community was necessary to operate the plant. He acknowledged the payoffs were “beyond what common sense” would allow, but said he didn’t feel he was in a position to decline or return them without angering Moriyama.

The gifts were kept at Yagi’s home in Osaka. Yagi denied receiving anything or meeting Moriyama after he became president of the utility in 2010.

--With assistance from Takako Taniguchi and Stephen Stapczynski.

To contact the reporters on this story: Aya Takada in Tokyo at atakada2@bloomberg.net;Gearoid Reidy in Tokyo at greidy1@bloomberg.net

To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net, Aaron Clark

©2019 Bloomberg L.P.