A Tokyo court has fined the well-known advertising company Dentsu Group Inc ¥300 million for unfairly fixing bids related to the 2021 Tokyo Olympics and Paralympics. The fine was exactly the amount that prosecutors had requested. The case also involved Koji Hemmi, a former Dentsu executive, who was sentenced to two years in prison. However, his sentence has been suspended for four years, meaning he will not have to go to jail unless he commits another crime during this period. Prosecutors had initially asked for a two-year prison sentence without suspension.
Dentsu is the third company to be found guilty in this case. In total, six companies were charged with unfair practices linked to contracts for organizing the major international sports event. Both Dentsu and Hemmi have decided to challenge the court’s decision by filing an appeal.
Understanding the Bid-Rigging Case
Bid-rigging is a dishonest practice where companies secretly agree on who will win a contract before submitting their bids. This eliminates fair competition and often leads to higher prices or unfair advantages. In this case, the Tokyo District Court found that Dentsu had engaged in such activities while handling contracts for test events before the 2021 Summer Games.
The contracts in question were worth more than ¥500 million and involved organizing test events before the actual Olympics. These events were crucial in checking whether everything was running smoothly before the Games began. However, prosecutors claimed that the problem went beyond just test events. They argued that organizing the test events and managing the actual Games were closely related activities. Therefore, the unfair practices restricted competition for contracts worth ¥43.1 billion.
The prosecution based its case on testimonies from several key witnesses, including a former executive from the Tokyo Olympics organizing committee. This person had already been found guilty of bid-rigging. The court considered these testimonies as evidence to prove that Dentsu was involved in unfairly controlling the bidding process.
Key Findings of the Court
The presiding judge, Kenji Yasunaga, stated that companies that handled the test events were later told they would likely be chosen to manage the actual Games. This meant that the competition was unfair from the beginning. Judge Yasunaga also found that Dentsu was aware of this situation.
During meetings, Dentsu reportedly gave signals to other companies, suggesting that their bids would be accepted if they followed the preferences of a former Olympics executive who was involved in these decisions. This kind of influence restricted fair competition and gave certain companies an unfair advantage over others.
However, the court did not find solid evidence that Koji Hemmi personally exchanged information in a way that allowed companies to guarantee contracts. Moreover, there was no proof that Hemmi personally benefited from these activities. Because of this, the court decided to give him a suspended sentence instead of sending him to prison immediately.
Dentsu’s Response
Dentsu expressed disagreement with the court’s ruling. In an official statement, the company said that the court’s decision was very different from its own arguments. Dentsu also mentioned that it would appeal the ruling and continue to defend its position.
Other Companies Involved in the Case
Dentsu was not the only company charged in this case. Several other well-known advertising and event production companies were also found guilty of bid-rigging. These included:
- Hakuhodo Inc
- Tokyu Agency Inc
- Cerespo Co
- Fuji Creative Corp
- Same Two Inc
All these companies were accused of working together in unfairly securing contracts between February and July 2018.
Last year, the court had already punished some of these firms. Hakuhodo was fined ¥200 million, while Cerespo had to pay ¥280 million. Like Dentsu, these companies also disagreed with the court’s decision and appealed against the fines.
Impact of the Scandal on the Tokyo Olympics
The Tokyo Olympics were meant to be a celebration of sports and unity. However, scandals like this have cast a shadow over the event. Many people believe that the Olympic Games should be based on fairness and transparency, not secret deals and corruption. The involvement of major companies in illegal activities has damaged public trust.
The scandal has also raised serious concerns about how big contracts for international events are awarded. Many experts now believe that stricter rules and better oversight are needed to prevent such unfair practices in the future.
Lessons Learned from the Case
This case serves as an important lesson about the need for fairness in business and government contracts. Bid-rigging not only harms competition but also affects taxpayers and ordinary people. When companies unfairly win contracts, they might charge higher prices or provide lower-quality services. This can lead to financial losses and damage to public trust.
Authorities around the world are now paying closer attention to cases like this. Governments and organizations are working on new policies to make sure that contracts are awarded in a fair and transparent manner.
