$80 Billion Bullet Train Scandal in Japan

A scandal threatens to put the brakes on Japan’s plan to build the world’s fastest train. To surpass the nation’s famous bullet train, the project incorporates magnetic-levitation technology that promises to cut journey times from Tokyo to Osaka by more than half, to just over an hour. The $80 billion project carries the government’s added hopes of exporting the maglev technology.

1. What is the scandal?

It centers on possible collusion on contracts for the project by four of the giants of Japan’s construction industry — Kajima Corp., Shimizu Corp., Obayashi Corp. and Taisei Corp. The Tokyo District Public Prosecutors Office and the Japan Fair Trade Commission raided their headquarters earlier this month following reports that the four companies were under investigation for possible antitrust violations related to maglev contracts. All four firms acknowledged the raids and said they’re cooperating with authorities. On Dec. 19, the Yomiuri newspaper reported that Obayashi had admitted to the FTC that it colluded with the three others. An Obayashi spokesman declined to comment.

bullet train

2. How did the collusion allegedly play out?

The contractors are suspected of having conspired to decide in advance which of them would win orders and at what prices, meeting regularly to discuss bids, Japanese media including Sankei newspaper have reported. The companies prompted suspicions by each winning about the same number of orders, according to reports. A former Taisei executive is suspected of being the mediator in the collusion, passing on details of the project obtained from an acquaintance at Central Japan Railway Co., which is running the project, Asahi reported on Dec. 26. A Taisei spokesman declined to comment on the report.

3. What is magnetic levitation exactly?

Maglev trains use magnetic power to float carriages, eliminating the friction of tracks. The trains set off on wheels (the kind used on F-15 fighter jets) until there’s enough speed for the magnets to kick in and create lift. China already operates a maglev over a short route in Shanghai, but the Japanese work-in-progress is on a much larger scale. During a trial in 2015, Japan’s project set a world speed record for a train — 603 kilometers an hour (375 miles an hour).

4. When can I ride it?

Don’t line up for tickets just yet. Central Japan Railway, known as JR Central, is running the project and began construction in 2015, but the first leg — from Tokyo to Nagoya — isn’t scheduled to open until 2027. The second stage, to Osaka, is planned for 2045, though the government is providing a loan to try to bring that forward by eight years.

5. Why is the project so important for Japan?

The government has hailed the project as “Japanese technology that will revolutionize intercity transport.” It sees maglev as a highly exportable revenue generator, with foreign dignitaries frequently taken on rides at a test line near Mount Fuji. Prime Minister Shinzo Abe has said his government may provide financing to JR Central’s bid to provide trains for a proposed Washington-Baltimore line. Japan’s interest in maglev technology dates back to the 1960s, about the time when bullet trains first appeared.

6. Why has it taken so long to develop?

As well as the cost, there are technical challenges. Such as tunneling through the Japanese Alps. Or making the train line straight enough to accommodate maglev’s speed. To achieve that goal, JR Central has to dig some 246 kilometers of tunnels for the first leg — almost five times the length of the Channel Tunnel linking Britain and France.

7. What’s at stake in the collusion allegations?

Other than another black mark for Japan Inc. in a year when manufacturers admitted faking data, there’s a risk that the project will face delays. The contractors under suspicion constitute all but one of the so-called super zenecon, or super general contractors, that dominate Japan’s construction market. The super zenecon are said to be the only companies with the capacity to handle large-scale projects with the technical precision required. Tunnel-building would face a serious obstacle if the investigation were to jeopardize their involvement, industry experts say. Many see such far-reaching consequences as unlikely, however. Transport Minister Keiichi Ishii has declined to comment on the possibility of delays.

8. What’s at risk for the companies?

The worst-case scenario is a criminal conviction against the companies and their executives, according to Daiske Yoshida, a Tokyo-based partner at Latham & Watkins LLP. While Japanese authorities rarely prosecute cartels, criminal charges were filed against three of the nation’s ball-bearing makers in a price-fixing case earlier this decade. Shares in the four construction firms fell as much as 10 percent in the days following the first reports, but investors don’t seem overly concerned. “The market isn’t having a big reaction,” said Minoru Matsuno, president of Tokyo-based investment adviser Value Search Asset Management Co. “There is a feeling that the market accepts that for this type of large-scale project, bid-rigging is a necessary evil.”

– Bloomberg



I Eat Some, You Eat Some

We are in the midst of a daily scam unraveling.  What does this say about the times or the society we live in?  I suppose, we were always corrupt, it was ingrained in our DNA.  Its only now that the skeletons are tumbling out.  Whether its the 2G scam, Adarsh scam, Commonwealth games scam, Kargil coffin scam, mining scam of Karnataka, the land scam concerning Yedyurappa, Satyam scam, Telgi scam, Harshad Mehta scam and the thousands other that are swirling in the news.

The scams were always happening. Its just that only now they are unraveling.  Does anyone remember the time when buying a scooter, ambassador car, telephone etc used to have a waiting time of years.  Today, you can throw in some money and take your pick.  Liberalisation has in fact brought down corruption a lot.  Earlier not a single file moved in the government office without bribe being paid.  Today a lot of government job can be done on the internet without the need for stepping into an office.  Just a decade ago, the government run PSU banks ran amuck. I remember having the misfortune of going to the banks to create a Demand Draft and know the headaches I had to endure.

Today, the private banks have revolutionised the business.  Hardly anyone of the present generation visits those PSU banks. The PSU banks are bending over backwards to win their business. Getting a driving license is not a chore anymore too. Many of the government work is either become efficient due to private sector competition or due to the introduction of technology.

Does it mean that all is hunky dory?  No, it isnt. The poor even today have to endure the red tape of the government.  Getting the loans granted by the government in their hands is at the mercy of the officer who is disbursing it.  After a catastrophe, the government declares an ex-gratia.  But the official overseeing the disbursal will make sure he get his cut before the money is given.  This trait of feeding over the dead body has been prevalent for decades.  Today, its a bit more difficult as you can call up the media to raise a muck and make sure the money is disbursed faster without any corruption in between.

So, why is it that so many scams are surfacing?  Truth is that the scams have been in our midst for decades.  Kalmadi was not involved in the sports graft for the first time.  He is a survivor in that business for decades.  His family and his cronies have made millions over these years.  People knew that yet didnt raise the muck because it was mostly hidden.  One didnt have access to all the information. Today the Right to Information (RTI) act and other kinds of citizen & judicial activism has increased. People are more aware of their rights and hence all these skeletons tumbling out.

Another reason is because the political parties themselves use these scams to settle scores. Its a simple theory which goes like… you expose one scam of mine and i do the same about you.  None of them are about public welfare nor is that only one political party is responsible for the mess.

Both the BJP and Congress are 2 sides of the same coin.  Both corrupt to the core.  If you were believing that the BJP led NDA was supposed to give you an alternative, you were living in a fools paradise. The NDA and its constituents are as equally bad as the UPA if not worse.

The Radia tapes doesnt reveal anything new.  Its a known issue that during the license permit raj of the 70s to 90s, businessmen used to pamper the politicians in power so that they could bag business or made sure that some of the laws were tweaked in their favour.  Today with lots of bidding and laws being online, its gone down to a large extent.  Even the media was nothing holy.  Currying favour with the media to carry their side of the story by politicians and businessmen was the norm earlier too.  Today its given a respectable name like Corporate Relations or Public Relations.

Anyway what i find baffling is the common man’s surprise at all these events.  Let’s face it.  We Indians have corruption engrained in our DNA.  We are taught from young on how to circumvent the rules, how to bribe the policeman to get away, to bribe the municipality to extend the height of the house by another floor etc.  If there was no TDS, am sure none of the so called “middle class” in India would pay taxes.  In fact the middle class of India are the biggest hypocrites you can encounter.

How did Raja, Kalmadi, Chavan, Yeddyurappa, Karunanidhi, Lalu, Mayawati etc come to power?  We voted them to power.  To satisfy our silly egos, to protect our so called religious casteist, regional beliefs etc we vote them to power.  Integrity is not something we are known for.  Everything and anything goes.  We are good at masking our incompetence with the national slogan of chalta hai attitude.  As government officials, we take bribe to do our work.  Our police takes bribe from the mafia and look the other way as they go about killing innocents and trading in arms and drugs.  We ourselves screw up our society and then blame all and sundry.

The rot is set.  Its a part of us.  Its in our system.  Its in our blood.  So, lets look within ourselves and cleanse ourselves as we go about uprooting this cancer of corruption from our midst.

Above pictures courtesy: Akalol & Indiabuzzing