The Yomiuri Shimbun
The easiest way for Yamada Corp. employees to attain their sales goals was to pad bills for defense equipment the company supplied to the Defense Agency, employees of the company said.
Yamada, a defense equipment trader, has consistently padded bills since shortly after the company was established in the 1970s, an employee said Thursday.
In some cases, the company colluded with foreign makers to inflate bills for such supplies, a practice that has called into question the sloppy monitoring system of the agency, now the Defense Ministry, which failed to unearth the practice for such a long time.
According to the employees, it was common practice for Yamada to pad bills charged to the ministry.
A former senior employee who worked as a long-time salesman for the company said prices estimated by a section chief would be inflated if his superior (the department chief) said such prices would not make money.
"Profits would be inflated by two or three times more than usual," he said.
An employee said each division had a sales goal, which was easiest to attain by inflating bills.
"This was a practice that enabled us to inflate bills without much thought," he said.
Transportation and technology assistance fees, such as when foreign manufacturers sent staff members to Japan to show local counterparts how to use products, were padded.
Yamada also increased profits by inflating unit prices and submitting bogus estimates and invoices from overseas to the ministry.
A former employee said that since photocopies of price estimates could be submitted, figures that were rewritten after the originals were deleted with correction fluid were never found out.
Yamada also shared profits with foreign makers that resulted from colluding to inflate bills.
The ministry has so far discovered only one case in which Yamada padded bills.
However, after finding that Yamada had inflated by about 190 million yen the price of equipment supplied for use on Maritime Self-Defense Force patrol helicopters in fiscal 2000, the ministry only reduced contracts awarded to Yamada without meting out punishment.
A former senior Yamada employee said that since the ministry did not check every price, it would not know anything was wrong if Yamada and makers arranged beforehand to tell the same story, a remark indicating Yamada took advantage of lax ministry checks.
On Thursday, the ministry announced a probe had found padded bills amounting to 3.7 million yen in two new cases.
However, that investigation was prompted by inquiries by a Democratic Party of Japan lawmaker who directly asked foreign makers whether the estimates submitted by Yamada were correct.
In mid-November, after asking 40 foreign makers to check their estimates, the ministry found two out of three estimates that were returned had been inflated.
Over the past five years, Yamada has won 117 contracts worth about 17.4 billion yen from the ministry and about 550 contracts from local defense bureaus.
(Nov. 24, 2007)
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