Several officials of Japanese ad giant Dentsu Inc. have admitted to collusion over bid rigging for contracts related to test events for the Tokyo Olympic and Paralympic Games, a source familiar with the matter said Friday.
The officials admitted to the wrongdoing during voluntary questioning with prosecutors, while maintaining they were not aware of any illegality at first when the bid rigging took place, according to the source.
A former operations executive of the event's organizers is suspected of playing a lead role in the rigging, along with several Dentsu staff, some of whom were seconded to work for the games.
In 2017, Dentsu, at the request of the games organizers, created a list of advertising agencies and other firms to categorize them into groups by their respective track records in each sport, according to the source. It is suspected that the list was used in arranging successful bidders.
Prosecutors believe the bid rigging constituted a violation of the antimonopoly law, and the Tokyo prosecutors' special investigation squad has since deepened an investigation into the case in cooperation with Japan's fair trade watchdog.
It is suspected that the rigging took place in connection with the 26 open bids held in 2018 for the rights to plan 56 test events. These were awarded to nine companies, including Dentsu and fellow ad giant Hakuhodo Inc., as well as a consortium.
The test events -- held so organizers can check for potential problems with operations, security and guiding audiences -- were carried out between 2018 and 2021 before the Summer Games were held after a one-year postponement due to the coronavirus pandemic.
Since November, prosecutors and the Japan Fair Trade Commission have conducted searches of firms suspected of bid rigging, including Dentsu and Hakuhodo. Another Japanese advertising agency, ADK Holdings Inc., has admitted to participating in the bid rigging, although numerous other suspected companies have denied the allegations.
In addition to the bid-rigging case, prosecutors are investigating a widening corruption scandal centered on former Tokyo organizing committee executive Haruyuki Takahashi, who used to work for Dentsu. Takahashi is charged with receiving around 200 million yen ($1.5 million) in bribes from five companies, including ADK.