What happened?
At Kansai Electric Power, officers and employees had for years received cash, gift certificates, precious metals and other items from Eiji Moriyama, a former deputy mayor of Takahama Town in Fukui Prefecture, and from companies connected with him.
The Third Party Committee report published in March 2020 identified 75 officers and employees of Kansai Electric and group companies who had received items worth about ¥360 million in total. The Committee also examined the company’s dealings with Moriyama, orders placed with related companies, and the internal investigation and disclosure decisions made after the issue came to management’s attention in 2018.
Background: Kansai Electric Power Company (Wikipedia)
Twelve passages that stood out
The total value of the gifts tells only part of the story. The report also documents valuables hidden in paper bags, employees who found it difficult to return what they received, and written instructions handed from one manager to the next. It records how the company investigated the matter and decided not to inform its Board. These twelve scenes include the words of actual emails and letters. Page references are to the Japanese report’s printed pages, except Note 5, which uses a physical PDF page for an unnumbered appendix. English excerpts and summaries are translations by From Reports, not an official English translation of the Japanese source.
Two 1 kg gold bars were left at a director's home
A person who was then a director was among those who received items from Moriyama from the early 1990s onward.
They included two one-kilogram gold bars and gold koban coins.
According to his account, Moriyama visited his home after he became a director and left the bars there. Each bar was worth about ¥1.4 million at prices at the time.
People took home bags of tea or sweets and found gift certificates at the bottom
The items were not always handed over openly as envelopes of cash.
Interviewees told the Committee that in many cases Moriyama or representatives of companies attending the same meeting gave them paper bags containing tea, sweets or other gifts, with gift certificates or similar valuables placed at the bottom.
Some first-time recipients did not notice the extra items until they returned to the office or went home.
Trying to return the gifts could provoke anger, so an equal-value return-gift method was passed on
Many officers and employees told the Committee that Moriyama frequently became enraged when they refused an item or tried to return it directly.
The report records one account in which Moriyama said, in substance, that if his goodwill could not be accepted he would tell people in Takahama that the nuclear plant should be stopped.
As a result, some recipients bought goods of roughly equivalent value and gave those back to Moriyama instead.
Many said they learned this method from predecessors or colleagues.
A fake cash bundle was made with playing cards and scrap paper so no real cash had to change hands
Suzuki, an executive in the Nuclear Power Division, said he had asked an officer of Yoshida Kaihatsu to stop providing him with gifts. According to Suzuki, the officer replied that he had little choice because Moriyama was instructing him to prepare them.
Suzuki said the two then devised a way to make it look, in front of Moriyama, as if cash had been handed to Suzuki without actually transferring real money. The Yoshida Kaihatsu officer denied to the Committee that this staging took place.
The Committee, however, inspected the physical fake bundle that Suzuki provided.
It consisted of playing cards and the blank backs of miscellaneous papers stacked to roughly the thickness of a banknote bundle and wrapped in paper.
Taking the physical material and other circumstances into account, the Committee assessed Suzuki’s account as highly credible.
The inventory’s return columns included a painting, a kitchen knife, a magic mirror and ceramic jars
Appendix 4-1-2-2 records received items and returned items or return gifts in separate columns.
The return columns include a painting, a kitchen knife, a “magic mirror,” a necklace, a Baccarat glass vase and ceramic jars.
The magic mirror, given in return for ¥50,000 in gift certificates, was valued at ¥100,000. Ceramic jars given in return were listed at ¥500,000 or ¥1 million.
One recipient organized gifts with sticky notes; a warehouse held two Rolex watches whose recipient was unknown
Received items were stored in homes, safe-deposit boxes, office drawers and company cabinets.
Suzuki kept his items organized with sticky notes recording information such as the date, amount and counterparty.
During the Third Party Committee investigation, Kansai Electric also found two Rolex watches in a company warehouse with a note identifying them as valuables held by the company from Moriyama of Takahama.
The Committee could not determine who had originally received them from Moriyama.
A Takahama plant-manager handover document had a section titled 'Sensei section'
Dealing with Moriyama had become part of the handover from one Takahama Nuclear Power Station manager to the next.
A 2014 handover document referred to Moriyama as “Sensei,” a Japanese honorific, and included a section titled “Handover items (Sensei section)”.
It recorded practical details about calls, recurring events and orders involving related companies.In a separate internal email, a plant manager wrote that Moriyama called roughly ten times a month, a frequency the manager described as “about once every two days.” The manager also described having to use maintenance personnel to respond to Moriyama’s request for a report on an additional ¥100 million of work for a related company while the plant was dealing with an accident.
January 7, 2011 — Email from the Takahama plant director to senior nuclear-division managers (extract)
From Reports translation of the Japanese original (not an official translation)
Sorry, but let me vent again. There is no problem, so please do not worry.
[Passage omitted]
I seriously wonder how long we are going to keep dealing with this. A one-on-one meeting every month in Kyoto, and around ten telephone calls a month (roughly once every two days). Is it escalating?
That concludes my grumbling. I have let off steam, and from tomorrow I will respond as usual again, so please do not worry. Thank you for listening.An annual briefing on next year's work and approximate order amounts was handed down to successors
At Kanden Realty & Development, an executive had been meeting Moriyama about once a year since at least the early 2000s.
At these meetings, the executive explained the work expected to be ordered the following year from Yoshida Kaihatsu and two anonymized companies, X2 and X4, together with approximate amounts.
From the 2010s onward, Moriyama requested briefings only on work for Yoshida Kaihatsu. The relationship continued into the latter half of the decade, and the practice was handed down from one executive to the next.
In a separate construction matter, the parent company’s Takahama plant director sent Moriyama a written report on how the additional orders were progressing.
November 22, 2010 — Letter from the Takahama plant director to Moriyama (extract)
From Reports translation of the Japanese original (not an official translation)
The attachment sets out the contract status and amounts for the additional works reported to you at the end of July this year. As the work and schedules have been finalized, many project names differ from those previously reported. Nevertheless, we fully intend to honor our promise and ask for your continued guidance.The internal investigation of the nuclear division ran through a manager who had himself received gifts
When Kansai Electric conducted its internal investigation in 2018, inquiries within the Nuclear Power Division were conducted through deputy division head Zenke.
Zenke, however, was himself one of the people who had received items from Moriyama.
The people to be investigated also included Toyomatsu, Zenke’s superior. The Third Party Committee said that, once the initial emergency response to the tax investigation had passed, Kansai Electric should have avoided making Zenke function as an investigator in the inquiry.
Management decided not to disclose the issue — and then not to tell the Board, to reduce the risk of a leak
In September 2018, the chairman and president, after consulting an adviser, decided not to disclose the gift issue publicly.
The following month, they decided not to report it to the Board or to individual directors, including outside directors.
The stated concern was that expanding the number of people who knew about the matter would increase the risk of information leaking.Some people in the legal function disagreed, but the matter was not reported. The outside directors first learned about the issue from news reports in September 2019, rather than from the company.
Three people given 'strict warnings' over the gift issue were all promoted the following year
On September 25, 2018, Morinaka, Suzuki and Otsuka each received an internal disciplinary measure described as a strict warning in connection with the gift issue.
In June 2019, Morinaka was promoted to deputy president executive officer and head of the Nuclear Power Division; Suzuki became a managing executive officer and deputy head of the division; and Otsuka also became a managing executive officer.
A former deputy president who had received about ¥110 million became a ¥4.9 million-a-month executive fellow the next day
The Third Party Committee found that Toyomatsu had received items worth about ¥110 million in at least 40 instances from Moriyama and related companies.
Toyomatsu retired as a director on June 21, 2019. The next day, he became an executive fellow responsible for nuclear-related matters, with monthly compensation of ¥4.9 million.
According to the report, the ¥4.9 million monthly total consisted of ¥3.7 million in base compensation plus two additional compensation components.
Those components were ¥300,000 a month intended to compensate for additional tax arising from amended returns connected with the gift issue, and ¥900,000 a month intended to compensate for earlier reductions in directors’ remuneration.
Toyomatsu told the Third Party Committee that he had not understood the ¥4.9 million figure to include compensation for the additional tax or the earlier pay reductions.
What the report says about the background
The Third Party Committee criticized the time span, range of people and depth covered by the 2018 internal investigation. It also concluded that failing to report the issue to the Board or individual directors, including outside directors, had deprived them of the opportunity for objective discussion (report pp.173-175).
The source is the Third Party Committee investigation report published by Kansai Electric.
Corrections to this article
Note 05 now distinguishes received items from paintings, kitchen knives, a magic mirror, a necklace, a Baccarat vase and ceramic jars listed in the return or return-gift columns. Note 02 also includes representatives of companies as possible people handing over the paper bags. The inventory reference identifies physical PDF page 233 of Appendix 4-1-2-2 rather than a printed p.233. Note 08 preserves the narrowing of the annual briefing to Yoshida Kaihatsu from the 2010s, and note 09 restores the Committee’s distinction between an emergency response and the later inquiry. Note 11 adds p.170 for the warning date, and note 12 adds p.88 for Toyomatsu’s receipts and translates 40回以上 as at least 40, rather than more than 40. Note 07 explains Sensei as an honorific for Moriyama rather than translating it as Teacher, and attributes the frequency comparison to the internal email.