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Japanese prosecutors charge Dentsu and others over Olympic bid-rigging scandal

Dentsu and 5 different Japanese firms have been indicted over bid-rigging allegations associated to the 2020 Tokyo Olympics in a scandal that has engulfed essentially the most richly sponsored sporting occasion in historical past.

The transfer by Japanese prosecutors towards public relations big Dentsu marks an escalation in authorities’ efforts to unravel a fancy internet of suspected impropriety forward of the Video games, which have been held a 12 months not on time and with out spectators due to the Covid-19 pandemic.

Over the previous six months, prosecutors have introduced a string of bribery prices towards a former Dentsu govt and enterprise leaders concerned within the Tokyo Olympics, together with the chair of considered one of Japan’s most well-known makers of enterprise fits, the chair of a publishing empire and the president of an organization that made Video games mascot toys.

However the central focus of the investigations has been Dentsu, the promoting behemoth that’s extensively thought to be one of many nation’s strongest establishments. In addition to its grip on lots of Japan’s largest company accounts, Dentsu has lengthy been entwined with the ruling Liberal Democratic social gathering and counts the federal government amongst its largest shoppers.

Dentsu was closely concerned in Tokyo’s internet hosting bid and in lots of subsequent preparations for the Olympics. Executives at firms that joined the checklist of sponsors for Tokyo 2020, which included banks, actual property builders and bathroom makers, described high-pressure negotiations with Dentsu that in the end secured greater than $3bn in sponsorship.

In a press release on Tuesday, Tokyo prosecutors alleged that Dentsu — together with its largest home promoting rival Hakuhodo, the smaller Tokyu Company, two occasion organising firms Cerespo and Identical Two, and TV manufacturing group Fuji Inventive — violated antitrust rules by limiting participation in Olympic take a look at occasions and competitions in 2018.

Seven people allegedly concerned within the bid-rigging course of have been additionally indicted.

The costs have been triggered by legal complaints filed earlier within the day by Japan’s Honest Commerce Fee, which stated that bidding for these occasions amounted to ¥43.7bn ($320mn).

Following the indictment, Dentsu stated 5 executives on the group and its subsidiary would return their pay and that it could arrange an investigative committee of out of doors specialists. “We take this matter extraordinarily critically,” the corporate stated.

One particular person near Dentsu stated regardless of the widening scandal, the corporate was unlikely to undergo vital long-term harm to its place as a digital monopoly in Japan’s promoting market.

“The corporate will get a slap on the wrist, however the reality is that no main firm in Japan can actually reside with out Dentsu in some capability, and they also will seemingly not lose many purchasers over this,” the particular person stated.

Final 12 months, prosecutors arrested senior figures at Dentsu and different firms alleged to have performed a job in rigging bids. The heads of some sponsors have been arrested over allegations that they paid bribes for beneficial therapy throughout preparations for the Video games.

In separate statements following the indictment, Hakuhodo and Tokyu Company stated they took the problem “very critically” and pledged to take measures to strengthen their compliance.

Fuji Inventive apologised for issues it prompted to stakeholders however disputed the allegations, saying it could clarify its place in full at trial.

Cerespo and Identical Two declined to remark, saying they’d not obtained a proper discover from prosecutors.

“The Tokyo 2020 Olympics will need to have been the primary time for non-major Japanese firms to sponsor the Video games, and these firms trusted Dentsu for every part,” stated one of many company supporters who labored with Dentsu for the primary time on the Video games and declined to be named. “All these scandals of Dentsu are a results of this heavy dependence.”

Earlier within the week, Tokyo governor Yuriko Koike instructed an meeting assembly that the metropolitan authorities would probably search compensation from firms discovered to have rigged bids across the Olympics and would help the organising committee underneath town’s authorities to do the identical.

Koike, who was a outstanding determine through the Video games, stated she would encourage the organising committee to file a damages declare towards Dentsu, with town performing because the committee’s adviser.