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Private firms bought Fukushima NPO corp. to gain edge on reconstruction contracts

This picture shows the receipt for the purchase of an NPO corporation in Fukushima Prefecture for 100,000 yen. (Mainichi)

A specified nonprofit corporation set up for the promotion of Fukushima Prefecture following the March 2011 triple nuclear meltdown there was purchased by a local construction company and then resold to another builder for the purpose of winning reconstruction project contracts, a Mainichi Shimbun investigation has found.

The two companies used society's high trust in those corporations, also known as NPO (nonprofit organization) corporations, to get closer to potential customers such as local companies or public entities and make money, although such entities are not meant for profit.

The corporation in question was originally established by a man in his 70s in Fukushima because he wanted to promote the prefecture's nature and counter damaging rumors related to the Fukushima No. 1 nuclear plant accident. It is one of 11 NPO corporations that the Mainichi identified as targets of commercial transactions.

However, the original founder was forced to suspend its operation due to a funding shortage. He sold the corporation to the president of a construction company in Fukushima Prefecture for 100,000 yen on Dec. 5, 2014, and the purchaser resold it to the chairman of a contractor in Chiba Prefecture on Oct. 30, 2015, for 1 million yen.

The president of the Fukushima company thought that perhaps an NPO corporation would have an edge in competition for reconstruction-related contracts. So he approached the original owner, whom he had known for some time, to sell the corporation to him if it was dormant. However, the president's expectations proved hollow and his business began to fail, unable to cover workers' salaries.

The Chiba contractor's chairman learned about the NPO corporation through the construction industry rumor mill, and he made an immediate decision to buy it. He explained that the purchase was to make connections with potential customers such as major construction companies looking for subcontractors, local governments with information on future contracts, local assembly members who could wield influence or local companies that may distribute work to his company. Having a face as a local NPO corporation, the chairman said, would produce business opportunities unavailable to non-local competitors.

In fact, the NPO corporation has not played a role in his business and he uses other methods to win Fukushima contracts. "Perhaps I should use it in the future," said the chairman with a laugh.

Another contractor in Fukushima said that NPO corporations are in high demand and there have been many transactions since the Great East Japan Earthquake of 2011. What the Mainichi investigation has uncovered is "just the tip of the iceberg," he said.

Brokers trying to buy NPO corporations in Fukushima contact the contractor, he said, "because it's easier for those corporations to win subsidies from the environment and agriculture ministries." Brokers resell those corporations at values several times higher than their purchase prices, according to the contractor.

A broker in the Kinki region in western Japan involved in the buying and selling of NPO corporations said, "Perhaps people are buying up NPO corporations in Kumamoto," in reference to reconstruction following the April 2016 Kumamoto Earthquake.

(Japanese original by Ryuji Tanaka and Taiji Mukohata, Special Reports Group)

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