Mitsui falls on bid-rigging arrests


Mitsui lost 1.82 percent Thursday, while the Nikkei 225 average closed at 10,632.81, down 1.66 percent

TOKYO, Japan -- Stock in trading house Mitsui & Co. dropped 1.82 percent to 810 yen on Thursday.

The fall comes after police arrested three Mitsui executives on Wednesday. They are suspected of rigging bids on a power project.

Prosecutors have also searched Mitsui's headquarters in the Otemachi area of Tokyo.

The company has been under investigation for some time for its role in the 2000 bidding on a power project on Kunashiri island.

The island is technically Russian territory but is one of four contested by Japan.

Authorities see foreign ministry tie

On Wednesday, police arrested Masahide Iino, 44, head of an industrial-project team, and two younger employees: Yusuke Shimazaki, 38, and Masayuki Takehosi, 28.

Prosecutors allege they got information from Japan's foreign ministry on the government's budget for the power project.

Two foreign ministry officials, Akira Maejima and Masaru Sato, were served with fresh warrants. They were initially arrested in May and indicted for breach of trust.

Japanese authorities claim the Mitsui executives knew the price the government was willing to pay for a diesel generator project on Kunashiri.

Prosecutors allege they then interfered with an aid committee participating in the bidding. They believe the foreign-ministry officials helped the Mitsui executives to win the bidding.

Kyodo wire service reports that authorities believe Shimazaki and Takehosi asked Sumitomo Corp. and Kanematsu Corp. to put in dummy bids on the project.

Mitsui won 1.99 billion yen project

Kyodo, citing unidentified investigative sources, said authorities believe Takehosi pressed Marubeni Corp. to refrain from bidding.

Mitsui won the power project with a bid of 1.99 billion yen ($16.6 million). That was 99.9 percent of the government limit, according to prosecutors.

Because of the length of the investigation, Wednesday's arrests were widely anticipated. Mitsui's stock fall is only marginally steeper than that of the broader market.

Mitsui gave up 1.82 percent, while Tokyo's Topix index closed down 1.04 percent at 1033.31.

Mitsui is one of Japan's oldest trading houses, or sogo shosha. It acts as a go-between for companies buying and selling goods.

There is speculation that the arrests could see it blocked from bidding on Japanese public works projects and overseas development deals.

It also trades a range of goods, including petroleum, industrial machinery, soft drinks and computers. It is attempting to build its business in information-technology and biotechnology.