15 Oct 2019
A payoff scandal has struck Japan’s nuclear world, threatening to delay the restart of idled reactors in what’s becoming the industry’s biggest crisis since the Fukushima meltdowns of 2011.
The issue, which emerged at the end of last month, centers around how an influential municipal official in a town that hosts a nuclear plant spent years doling out large gifts to executives of its operator, one of the country’s biggest power producers. It’s an example of how big business and small towns work together, sometimes at the expense of corporate governance.
The payments to senior management at Kansai Electric Power Co. included hundreds of millions of yen, U.S. currency, vouchers for tailored suits and even gold coins hidden in a box of candy. To make matters worse, the official in question was close to — and received money from — a company that won construction work from the utility.
The news is a blow to an already deeply unpopular industry as it seeks to resume operations at plants that were shuttered after Fukushima. It’s likely to have an impact beyond Kansai Electric, with the government’s top spokesman, who called the payoffs “murky,” vowing to investigate whether there are similar cases at other companies.
It’s also a headache for Prime Minister Shinzo Abe, who has set his stall as a proponent of nuclear power, a cheaper source of energy than imported fuels such as oil, coal and natural gas. And questions in parliament about the scandal may delay Abe’s efforts to pass a U.S. trade deal and proceed toward changing the country’s pacifist constitution.
“This could slow the restart timetables and undermine whatever goodwill had been recovered by the nuclear industry since Fukushima,” said Tom O’Sullivan, founder of Tokyo-based energy consultant Mathyos. Of Japan’s 33 operable reactors, just nine are back online. The nation operated 54 before the Fukushima disaster.
The scandal is the latest exposure of governance issues at Japanese companies, which include the arrest last year of Nissan Motor Co.’s chairman for concealing more than $140 million in compensation and Kobe Steel Ltd.’s indictment in 2018 for falsifying quality data.
Kansai Electric Chairman Makoto Yagi and President Shigeki Iwane bowed in apology at a three-hour public briefing last week as they detailed how they and 18 other executives received almost 320 million yen ($3 million) in cash and presents from Eiji Moriyama, who died at the age of 90 in March, from 2006 to 2018.
By Stephen Stapczynski, Bloomberg, 8 October 2019
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