Dentsu, Hakuhodo, ADK to face criminal charges in Tokyo Olympics bid-rigging case

After months of investigations, raids, denials, accusations, and admission, the three biggest advertising giants in Japan, Dentsu, Hakuhodo, ADK and two other firms and seven individuals stand indicted over suspected rigging of bids worth $320 million for the Tokyo 2020 Olympics and Paralympics.

On February 18, Dentsu Group president and chief executive Hiroshi Igarashi admitted Dentsu's involvement and collusion in planning and fixing the pre-Games test events and main competitions at the Tokyo 2020 Olympics and Paralympics. Former ADK Holdings president Shinichi Ueno also admitted to bribery charges to former Tokyo 2020 executive board member Takahashi n court last week. 

Charged with violating anti-monopoly laws (unfair trade restriction), the Tokyo District Public Prosecutors Office has also filed criminal charges against 56-year-old Yasuo Mori, the former organising committee official, Koji Henmi, former assistant head of the sports department of Dentsu Inc. and five others suspected of illegally awarding bids.

Interestingly, the rigged bids in question were conducted in 2018. Tokyo's public broadcaster NHK learned that Dentsu's behind-the-scenes collusion of drawing up lists for awarding unlawful,  discretionary bids started a year prior in 2017. 

We reported earlier this month that Dentsu, Cerespo and Fuji Creative are already barred from bidding for contracts at Tokyo government's events for a year.

The road ahead

Dentsu

After a very public blow to their image, for the first time since the news of the scandal broke,  Dentsu's statement to Campaign Asia-Pacific cites concrete actions which the company will take to ensure culpability. 

1. Stepping up a 3-member independent special investigative committee effective immediately (Feb 28):"The Special Committee will receive the Investigation and Review Committee's findings of the facts and causes and recommendations for preventing recurrence and report them to the Dentsu Group Inc.’s Board of Directors," it reads.

2. Committee composition:

• Chair: Masayuki Ikegami, former Supreme Court justice
• Member: Kenji Kawai, attorney, former chief justice of the Sendai High Court
• Member: Toshihiko Itami, attorney, former superintending prosecutor of the Osaka High Public Prosecutors’ Office

3. Disciplinary action against those involved

Dentsu Inc. says: "​The Company takes its responsibility for this matter seriously and has requested that the two Group Executive Management members currently in charge of the Japan region return their compensation."

Further, there is a promise of tighter governance.

"Additional improvements to governance and operations will be instituted at the company’s domestic subsidiaries in Japan," says Dentsu Inc.

Hakuhodo

Hakuhodo promises continued cooperation with the authorities. Their statement reads:

"Since [Nov 25 when Hakuhodo was suspected of violating the Antimonopoly Law] we fully cooperated with the investigation by the Tokyo District Public Prosecutors Office and the Commission. Today [Feb 28], Hakuhodo Inc. and one employee of Hakuhodo DY Media Partners Inc. have been indicted by the Tokyo District Public Prosecutor's Office based on charges brought by the Commission.

"Hakuhodo DY holdings Inc. deeply apologises to our shareholders, business partners, and all other stakeholders for any inconvenience and concern this situation may have caused. We also take this situation very seriously. The entire Hakuhodo DY group is committed to thorough compliance and to regaining the trust of society."

The story has been updated on March 1 with Hakuhodo's statement.