Defense Minister Shigeru Ishiba said Sunday he is considering filing a criminal complaint against defense trader Yamada Corp. for padding bills for equipment supplied to the Maritime Self-Defense Force.
“It’s fraud rather than padding, as written estimates have been forged to try to defraud the entire Defense Ministry,” Ishiba said on a TV Asahi talk show. “If the facts are confirmed, we should file a complaint.”
The ministry decided Thursday to suspend transactions with Yamada and its U.S. subsidiary, Yamada International Corp., for padding bills for at least two contracts in fiscal 2003 and 2004.
The suspension came after Yamada President Yoshihiko Yonezu visited the ministry and admitted there were overcharges in bills for a U.S.-made instrument used to overhaul propellers on MSDF US-2 flying boats in fiscal 2003 and U.S.-made components for a hydraulic system on SH-60K helicopters in fiscal 2004.
“We must investigate all and not only Yamada,” Ishiba said, indicating the ministry intends to scrutinize past bills by Yamada and all other suppliers and traders to check for more overcharges.
On whether the ministry needs to review its system of procuring equipment through trading firms, Ishiba said, “Creating a body like a procurement agency may raise the cost, but we must think about it.”
The ministry took the action Thursday at a time when an in-house panel is reviewing its equipment procurement system in the wake of collusion scandals involving former Yamada executive Motonobu Miyazaki and former Vice Defense Minister Takemasa Moriya.
In the case for the US-2, U.S. manufacturer Dynamic Instruments Inc. estimated the cost for the instrument at $43,000. But Yamada, which mediated the trade, sold it to the ministry for $68,000, making the ministry pay some ¥3.1 million more than the estimate.
In the second case, in which the ministry has yet to pay the money, Yamada signed a contract worth $31,816 with the ministry for four U.S.-made components for a hydraulic system on SH-60K helicopters. But the actual price of the components made by Autronics Corp. was $26,216.