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Editorial: KEPCO's news conference over payoff scandal betrays lack of corporate ethics

Kansai Electric Power Co. (KEPCO) President Shigeki Iwane recently held a second news conference over payoffs worth around 320 million yen that Eiji Moriyama, a late former deputy mayor of the Fukui Prefecture town of Takahama, made to 20 people including senior executives of the company. Takahama, located on the Sea of Japan coast, hosts a nuclear power plant operated by KEPCO.

Iwane released an investigative report from last fall over the payoff scandal as criticism was mounting over a lack of details regarding the receipt of money and gifts during the first news conference.

The latest media conference, however, left us appalled over KEPCO's lack of a sense of responsibility as a public utility.

Assembled reporters received information on the uncanny structure of collusion between KEPCO and Moriyama through nuclear power projects. Former KEPCO deputy president Hideki Toyomatsu and managing executive officer Satoshi Suzuki each received cash, gift coupons and other items worth at least 100 million yen from Moriyama, it was revealed.

KEPCO's nuclear energy headquarters were relocated from the utility's Osaka head office to Fukui Prefecture in 2005, where Toyomatsu served as chief of headquarters and Suzuki as deputy chief. It is appalling that they received hundreds of millions of yen worth of cash and valuables when they were in a position to provide a good example to others.

It was also revealed that gold coins were found in a bag containing sweets that was given as a congratulatory gift for Iwane's appointment as president. The episode brings to mind a scene from a period drama in which a vicious local governor appears. Iwane lacked a sense of crisis over the situation, where the provision of cash and valuables to officials was nothing unusual, and the company failed to systematically respond to the payoffs.

In-house investigations into the scandal, however, began only after national tax authorities inspected the power company. The utility's failure to report the facts and its investigation results to its board of directors can be regarded as a de-facto cover-up. The move constitutes a breach of trust, not to mention a lack of compliance.

Nevertheless, the punishment KEPCO officials received was far more lenient than what an ordinary company could be expected to mete out, with the most severe penalty being a 20% pay cut for two months for Toyomatsu and Chairman Makoto Yagi. Suzuki was merely handed a severe warning.

KEPCO explained the situation to reporters as if the firm was the victim of Moriyama's monetary and gift offensive, saying, "Each individual responded to the matter while exercising patience." The firm also claimed that the acceptance of the money and gifts did not violate any laws, and said the recipients only "held onto" them. Yet it was only after national tax authorities conducted an inspection that the firm returned roughly 160 million yen of the murky funds.

The sources of the money and gifts in question are believed to have come from a company that received orders for nuclear plant-related projects, where Moriyama served as an adviser. In other words, KEPCO's funds paid to the company were apparently funneled to officials at the utility. The situation represents a betrayal of consumers, and KEPCO cannot evade managerial responsibility.

KEPCO says it plans to continue investigating the scandal in a third-party committee. While the power company has admitted that it provided information related to construction orders, it has denied that doing so was in return for the acceptance of money and gifts. The flow of the shady funds and the purpose of the gift-giving have not been revealed.

Unless KEPCO can carry out a thorough probe into the issue, it is not qualified to continue to engage in the nuclear power business.

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