Bid rigging scandal

Takeo Obayashi, chairman and CEO of Japan's fourth largest general contractor Obayashi, has resigned, following the company's alleged involvement in a series of bid-rigging scandals. Company president Norio Wakimura and executive vice president Yoshishia Obayashi also resigned.

However, the three men will still work for the company. Takeo Obayashi will become be a board director, while the other two will be retained as nonexecutive advisors. Toru Shiraishi, a senior manager, will take over as chairman and CEO.

The management changes follow a series of arrests of company cials on charges of bid rigging. In April adviser Shigeo Morii was arrested over the contract, which an Obayashi-Asabuma joint venture won, to build a municipal incinerator in Hirakata, Osaka Prefecture in November 2005.

Following his arrest public official Toyosaburo Hatsuda, Obayashi advisor and Masaaki Yamamoto and a police inspector were arrested for suspected involvement in the scam. Mr Hatsuda is alleged to have received JPY 30 million (US$ 245000) for ensuring the joint venture won the contract. Hirakata mayor Hiroshi Nakatsuka is also being investigated.

A further Obayashi adviser is currently in court facing allegations of bid-rigging on the contract to extend Line 6 of Nagoya subway.