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Energy

Nuclear town's lavish gifts to Japan utility imperil plant restart

Kansai Electric chiefs under fire as industry worry about repercussions

Kansai Electric Power's units 3 and 4 reactors at the Takahama nuclear plant.

OSAKA -- The scandal involving shady payments to Kansai Electric Power executives by a nuclear host community is likely to dim the utility's prospects for restarting idled reactors as the public deepens its distrust of the operator.

A former deputy mayor of Takahama, the town north of Kyoto that hosts the namesake nuclear station, sent money and gifts totaling 320 million yen ($3 million) in value to 20 Kansai Electric executives over a seven-year period starting in 2011, according to the company and insider accounts.

The utility serving the greater Osaka area learned about the payments through an internal probe a year ago but decided not to make the matter public, concluding there was nothing illegal. 

The murky payments made by a powerful town figure highlight the nuclear business' outsize presence in the local economy and the collusive ties between them. The revelation is likely to harden a public already skeptical of nuclear safety, possibly delaying the restart of reactors operated by other utilities.

Recipients included Chairman Makoto Yagi and President Shigeki Iwane. Many of the gifts were made in the pretense of congratulating them for promotions.

Eiji Moriyama, the onetime deputy mayor, is believed to have received money from contractors hired for nuclear construction. Those funds could be the source for the gratuities sent to Kansai Electric executives. Moriyama died in March this year at age 90.

Iwane told reporters Friday that the process of awarding work to local contractors was "appropriate." The president said that he and Yagi will take salary cuts, but that they will stay in their posts.

"I'm intent of thoroughly implementing preventive measures," Iwane said. He doubles as chairman of the Federation of Electric Power Companies of Japan, a collection of large utilities.

Other utilities are critical of Kansai Electric, viewing the massive payments as outside social norms. "They crossed a line," said an executive from Tokyo Electric Power Co. Holdings.

An executive at one utility said Iwane and Yagi "should resign, or other companies will be also suspected of being in a cozy relationship with local governments, and reactor restarts will be doomed."

The stock market's reaction was swift. Kansai Electric shares lost as much as 8% Friday before closing at 1,314 yen, down 4%.

The Fukushima nuclear disaster in March 2011 prompted the shutdown of reactors nationwide. Kansai Electric turned in net losses for four years starting in fiscal 2011. The utility restarted four reactors between 2017 and 2018, which helped restore finances. The company was preparing to start three more reactors by 2021, including units 1 and 2 at the Takahama plant.

All three Takahama reactors slated for revival are more than 40 years old, raising concern among the public, and the scandal could further erode trust in the community. The restarts still need approval from the governor of Fukui Prefecture.

Moriyama began working in Takahama town hall in 1969, when the municipality initially applied to host a nuclear plant. Takahama lobbied Kansai Electric to build the unit 3 and 4 reactors between 1977 and 1987, when Moriyama served as deputy mayor.

Moriyama built connections to Kansai Electric through his lobbying, and he retained an outsize influence among local officials after his retirement.

"If you are going to do nuclear work, it is customary to go see him," a local source said.

"He was called the secret don around the town," said another local insider. "If you come to him with a problem, he will solve it using his connections."

The nuclear plant commands a large presence in Takahama. In the town's general account budget for the current fiscal year, nuclear-related receipts total 5.5 billion yen, or 53% of total revenue.

"Takahama and other localities in [southern Fukui] have a limited industrial base, and the involvement of local companies with nuclear power has developed the region," said Takeshi Inoue, an associate professor of economics at Toyo University.

"There are companies in the area whose business depends on nuclear construction," said a source close to a local building contractor.

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