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Firm handling Henoko base coastal security inflated invoices by 700 million yen: source

The coastal Henoko district of Nago, Okinawa Prefecture, site of a U.S. Marine Corps air station now under construction, is seen on April 19, 2018. (Mainichi)

A Tokyo-based security firm inflated bills for waterborne security around the construction site of a new U.S. Marine air station in the Henoko district of Nago, Okinawa Prefecture, by some 700 million yen, a source close to the situation told the Mainichi Shimbun.

Moreover, the Defense Ministry did not halt the contract even after the whistle was blown on the inflated bills, and went on to sign four contracts with the firm -- chosen for the job by construction giant Taisei Corp. -- worth a total of about 8.2 billion yen up to November last year.

Taisei won a June 2014 invitational bidding competition to build a temporary wharf and other facilities at the Henoko site for about 5.9 billion yen. The project tender by the Okinawa Defense Bureau -- the local branch of the Defense Ministry -- required that the winner also provide waterborne security to deal with anti-base protesters, and Taisei commissioned the task to the Shibuya Ward, Tokyo security firm up until the end of August 2015.

According to a source close to the affair, the firm provided round-the-clock boat patrols. Taisei paid the company based on how many security guards had been on duty, recorded in daily reports. However, the security company inflated the number of guards on duty. A whistleblowing report on the overbilling was received by the Okinawa Defense Bureau in January 2016, and a Taisei probe revealed the security firm had inflated its invoices by a total of about 700 million yen.

At the end of March that year, the security firm refunded the 700 million yen to Taisei. The contract between Taisei and the defense bureau was also modified, with some 736 million yen subtracted from the contract amount to offset the overbilled amount.

Defense Ministry rules state that contractors or subcontractors caught in "illicit or dishonest behavior" are to be barred from bidding on ministry tenders for a set period. However, the Okinawa Defense Bureau issued only a verbal warning to the security company and continued to allow it to bid on ministry contracts. Between July 2015 and January 2017, the bureau announced four tenders to provide waterborne security, all of which were won by the security firm, with bids totaling about 8.2 billion yen. In every case, the company was the only one to submit a bid.

The Board of Audit of Japan in November last year found that three of the four bids were approved as-is, though they exceeded the project cost estimates by some 188 million yen. In response, the Okinawa Defense Bureau rejigged the tender guidelines to make it easier for more firms to join the bidding, and waterborne security at the Henoko site was taken over by a different, directly-contracted firm in December last year.

The Shibuya Ward-based security firm told the Mainichi, "We had no intention of inflating the invoices. Our transactions with Taisei have all been calculated appropriately." Meanwhile, a Taisei representative said, "It was extremely regrettable that we accepted the inflated bills. From now on, we will thoroughly examine invoice content."

A Defense Ministry figure commented, "As Taisei and the security firm responded by confirming the details of the problem, we did not take steps to suspend their (ministry tender) bidding privileges. There are few firms in the waterborne security business, so there was no favor paid to any specific company."

(Japanese original by Nobuyuki Shimada, Shizuoka Bureau, and Yoshitaka Matsuura, Osaka City News Department)

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