TEPCO’s secret 40 billion yen donations to local governments near nuclear plants – "We wanted to avoid criticism that we had collusive relations with local authorities"

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Tokyo Electric Power Co. has been handing out about 2 billion yen (about $26 million) a year in unpublicized payments to local governments near its nuclear facilities, sources said Sept. 14.

Though the large sums in taxes and public grants paid by the firm to local communities are public knowledge, the full scale of its additional, anonymous giving has not previously been revealed.

It total, over the past 20 years, the company spent more than 40 billion yen on payments known internally as “funds to deal with local communities.”

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Haruyuki Matsuyama, a certified public accountant active in uncovering the finances of public organizations, said:

“I feel that donations by electric power companies are a kind of bribe. The donations are used to conciliate local communities. They are apparently different from genuine donations that do not seek a return.

The operations of administrations must be based on information disclosure. Anonymous donations imply that both electric power companies and local governments regard the donations as dubious.”

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One TEPCO executive said:

“We paid the donations because we wanted to obtain the understanding of local governments on the construction of nuclear power plants.

(We did not disclose the amounts of the donations because) we wanted to avoid criticism that we had collusive relations with local authorities.”

One TEPCO executive also said some local administrations had asked for money to cover budget deficits.

“We were not able to reject the requests because we had made those donations normal events,” the executive said, adding, “The responsibility weighed heavily on us.”

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According to several TEPCO executives, the electric power company earmarked 1 billion yen to 2 billion yen at the start of each fiscal year for the payments.

When necessary, that amount would be increased during the year, raising the average annual spending between 1990 and 2010 to more than 2 billion yen.

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That was in addition to the money flowing into local coffers from nuclear fuel taxes and grants mandated under the three laws on electric sources.

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TEPCO would first screen requests from heads of local governments and others for the payments, and then forward the proposals to its board of directors for approval.

The company would often ask local governments not to reveal it as the source of the payments and would give money without specifying how it should be used, allowing local officials to use it freely.

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The sum given to each local government was mainly decided on the basis of the amount of electricity generated in the nuclear power plants of each prefecture.

When very large payments were due to a particular local government, TEPCO would divide it over several years.

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Local governments receiving donations from TEPCO included the Fukushima prefectural government and the governments of the four municipalities where the Fukushima No. 1 and No. 2 nuclear power plants are located.

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Shuji Shimizu, vice president of Fukushima University, said: “One of the reasons for enactment of the three laws on electric sources was that it is not good to be securing places for the construction of nuclear power plants by using dubious donations.

It is obvious that the huge donations by electric power companies are related to nuclear power plants. If local governments depend on those donations, their finances will be forced to depend on nuclear power plants more and more.”

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Payments were also made to the Niigata prefectural government and two municipalities hosting the Kashiwazaki-Kariwa nuclear power plant, as well as the Aomori prefectural authorities and the city government of Mutsu, where a TEPCO-affiliated company planned to construct an intermediate storage facility for spent nuclear fuel.

Of a total of 34.7 billion yen identified as having been paid for the construction of public facilities, 19.9 billion yen went to local governments in Fukushima Prefecture, 13 billion yen went to authorities in Niigata Prefecture, and 1.8 billion yen went to Mutsu.

In exceptional cases, TEPCO disclosed donations for particularly expensive facilities. Fukushima Prefecture’s 13-billion-yen “J Village” soccer facility and park improvements in Kashiwazaki city and Kariwa village in Niigata Prefecture worth 10 billion yen were funded by the company.

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But the general approach was secretive.

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A TEPCO public relations official said:

“We refrain from disclosing each donation. We have disclosed the amounts of donations when the recipients have wanted to disclose them, or when the donations were made for large-scale projects.”

A former executive of the Aomori prefectural government said:

“We welcomed anonymous donations because we were able to use them freely.”

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The Mutsu city government purchased a shopping center building and turned it into a municipal government office building in 2006. Of the total cost of 2.8 billion yen, 1.2 billion yen was paid by donations from TEPCO.

According to former city government executives, the city had to move because of the age of its previous building, but could not pay for the relocation itself because of serious fiscal problems.

TEPCO was initially reluctant to pay, saying funding the relocation did not meet the donations’ official purpose of revitalizing local communities. However, the Mutsu city government pressed the point, saying the city government office was used by local people. TEPCO eventually accepted the request.

The fact that TEPCO provided the funding was only revealed after city assembly members blocked passage of the budget plan and insisted on transparency.

In Aomori Prefecture, the Federation of Electric Power Companies donated a total of 17 billion yen to prefectural government-affiliated organizations during the period from 1989 and 2009. Of that amount, about 5 billion yen was shouldered by TEPCO.

The municipal government of Naraha, Fukushima Prefecture, where the Fukushima No. 2 nuclear power plant is located, received a donation of 1 billion yen from TEPCO in fiscal 2007 to pay for the construction of a combined kindergarten and nursery school.

“We were not able to cover all of the construction costs, so we asked TEPCO for donations,” a Naraha municipal government official said.

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