PCI considers liquidation after latest arrests

Pacific Consultants International, a company that won a diplomatically sensitive but lucrative project in China, said it would suspend operations after its former president was rearrested on suspicion of defrauding the government.

The company, based in Tama, western Tokyo, is considering liquidating itself, sources said.

Former PCI chief Masayoshi Taga, 62, was arrested Tuesday on suspicion of defrauding the Cabinet Office of about 141 million yen by overcharging for personnel costs in a project to dispose of Japanese chemical weapons abandoned in China at the end of World War II.

Four others, including two former PCI managers, were also arrested in the fraud case.

Taga was initially arrested April 23 on suspicion of aggravated breach of trust in connection with the project in China, causing a loss of about 120 million yen to the company.

PCI and its group companies won orders worth about 30 billion yen from the Cabinet Office between fiscal 1999 and fiscal 2006 for the weapons disposal project.

The amount accounted for about two-thirds of the Cabinet Office's budget to get rid of the thousands of chemical weapons.

According to the investigation, PCI asked the Cabinet Office to pay personnel expenses for its engineers involved in a fiscal 2004 portion of the project. However, the company actually used engineers from subcontractors, whose wage levels were lower than PCI's.

PCI has long been implicated in shady business practices, but it continued to win contracts.

"We had heard nothing good (about PCI), but we had no other choice because there are few companies that can provide consultation services for overseas construction projects," said a Cabinet Office official who was once in charge of the projects.

In 2006, the Board of Audit said PCI overcharged the Japan International Cooperation Agency 140 million yen for official development assistance projects by padding costs and making fictitious contracts.

The four others arrested on Tuesday were: Tsutomu Kurihara, 56; Nobuo Kuga, 56; Hiroyuki Endo, 68; and Taku Maeda, 50.

Kurihara and Kuga were PCI managers at the time. Endo is a former president of Abandoned Chemical Weapons Disposal Corp., a wholly owned subsidiary of PCI's holding company. Maeda is a former director at the subsidiary.

Of the four arrested in April on suspicion of aggravated breach of trust, former PCI Presidents Tamio Araki, 71, and Shota Morita, 66, were indicted Tuesday.

Taga and another former executive were not charged on grounds that they played only subordinate roles.(IHT/Asahi: May 15,2008)