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Kansai Electric Names New President as Scandal Probe Ends

Kansai Electric Names New President as Scandal Probe Ends

(Bloomberg) -- Kansai Electric Power Co. selected Vice President Takashi Morimoto as the new president on Saturday, replacing Shigeki Iwane, after getting a report from a committee investigating the utility’s payoff scandal.

A total of 75 officials from Kansai Electric took cash and presents worth about 360 million yen ($3.4 million) from Eiji Moriyama, a former deputy mayor of the town of Takahama, and companies associated with him, according to the committee’s report released on Saturday.

Payoffs and the number of people involved were more than the utility had earlier disclosed. Moriyama began payments to Kansai Electric officials soon after he retired from the town’s post in 1987.

Read More: Top Kansai Electric Executives to Resign Amid Nuclear Scandal

“Moriyama’s first payment was made when he asked Kansai Electric people to make orders for work at the utility’s Ohi nuclear plant” to a company which accepted Moriyama as an adviser, said Keiichi Tadaki, the chairman of the investigation committee, after submitting the report to Kansai Electric.

The relationship between Kansai Electric officials and Moriyama started when the latter, as the deputy mayor, helped the company to build the No. 3 and No. 4 reactors in its nuclear plant in Takahama in the western Japanese prefecture of Fukui.

Easing Resistance

Moriyama worked hard to resolve various issues related to their construction, including appeasing people opposed to the new reactors, Tadaki said at a news conference on Saturday.

“Moriyama knew the dark side of Kansai Electric,” Tadaki said, referring to inappropriate acts by the company to resolve trouble with local residents. “That’s the beginning of the payoff scandal between them.”

Kansai Electric officials had difficulty rejecting payments and requests from Moriyama and companies associated with him, because they were afraid Moriyama would disclose inappropriate acts by Kansai Electric and hurt the company’s reputation, Tadaki said.

Moriyama’s requests to Kansai Electric officials, as well as his payments to them, escalated after the 2011 nuclear disaster in Fukushima prefecture, as the company had to spend more money to increase safety measures at its nuclear plants that were shut because of the disaster.

Kansai Electric has said its officials received illicit payments from 2006 to 2018 from Moriyama. The purpose of his payment to Kansai Electric officials was to encourage them to give work orders to companies with ties to him, Tadaki said.

Compliance Issues

“Kansai officials totally ignored the interests of the company’s customers,” in accepting payments from Moriyama and giving benefits to him over the past three decades, Tadaki said. “They lacked the sense of compliance.”

The investigation committee advised Kansai that its its chairman should be someone outside the company to improve compliance. Kansai Chairman Makoto Yagi stepped down in October amid the scandal. Tadaki said it’s hard to lodge criminal charges for the scandal, as some of the people involved in it, including Moriyama, have passed away.

The scandal may delay Kansai’s efforts to get the nuclear plants back online, as the move traditionally requires local consent, which might now be harder to gain.

The company planned to finish required work to restart three units -- Takahama No. 1 and 2, as well as Mihama No. 3 -- through 2021. Any delay in restarting plants adds extra fuel costs to Kansai Electric.

To contact the reporter on this story: Aya Takada in Tokyo at atakada2@bloomberg.net

To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net, Naoto Hosoda, Siraj Datoo

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