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Arrest of Top Contractor’s Chairman Could Help U.S. in Trade Talks

September 21, 1993

TOKYO (AP) _ For U.S. trade negotiators, the timing couldn’t have been more fortuitous.

They had just finished complaining that widespread bribery and bid-rigging made it impossible for foreign firms to compete in the Japanese construction industry.

Then the chairman of Japan’s largest construction company was arrested for allegedly bribing a politician.

Teruzo Yoshino, chairman of Shimizu Corp., is the most prominent official arrested in a series of scandals that has shaken Japan’s construction industry and political world.

″I’m afraid damage to the Japan-U.S. construction talks will be unavoidable,″ government spokesman Masayoshi Takemura said at a news conference Tuesday.

At talks last weekend in Hawaii, Japan accused American construction firms of not trying hard enough to win work in Japan, a Construction Ministry official said. The Americans responded that the bribery scandals have convinced U.S. companies that the Japanese market is closed.

Washington has threatened sanctions against Japanese firms if its demands for open bidding on Japan’s public-works projects are not met. Japan has recently loosened some restrictions on bidding but kept others.

Yoshino was accused of giving a local governor a $95,000 bribe last December, local reports said. The governor, former Construction Ministry official Fujio Takeuchi, has already been charged with taking hundreds of thousands of dollars in bribes from another major firm, Hazama Corp.

Shimizu president Harusuke Imamura called the allegations against Yoshino ″groundless.″

While the arrest may damage Japan’s trade negotiating position, it could also provide a spur to the political reform drive by Japan’s new government.

Prime Minister Morihiro Hosokawa’s coalition came to power denouncing collusion between the construction industry, bureaucrats and politicians during the 38-year rule of the Liberal Democratic Party.

In addition to allegations of bribery, construction companies reportedly decide among themselves who will win a government project before submitting bids.

Investigations into the construction industry spread after a tax evasion case against Shin Kanemaru, 79, once Japan’s political kingmaker. Kanemaru is charged with evading $9.6 million in taxes on hidden income, much of it suspected to have come from construction companies.

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