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Sat 14 Oct 2006 12:00 AM

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Obayashi Corporation faces bid rigging allegations

Obayashi Corporation, one of the main companies building the Dubai Metro system – is at the centre of bid rigging allegations in Japan, after prosecutors raided its Osaka head office last week.

The homes of company officials suspected of involvement in the scandal, which targeted tunnel projects in Wakayama Prefecture, were also raided.

Construction companies bidding on four projects allegedly told prosecutors that Obayashi played the leading role in rigging the bids when they were placed in November 2004.

The bids came in at 97% to 99% of the estimated cost of the projects.

One of the bids was won by Obayashi in consortium with two other contractors for a tunnel project on National Road, and cost US $14.4 million (JPY1.72 billion), or 97% of the government’s estimate.

The offices of two other contractors, Hazama Corporation and Tokyu Construction, as well as the Wakayama Prefecture office, were raided in September.

Investigators suspect the three worked together under the guidance of Obayashi.

The company, along with its Dubai Rapid Link partner, Kajima, were also among eight Japanese companies that faced charges earlier this year of bid rigging in connection with construction projects at two US military bases.

The allegations do not relate to the UAE operations of either company.

Obayashi declined to comment.

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