Former executives and political figures face trial over the bid-rigging scandal surrounding the construction of the new Kiryu City Hall. The case has exposed a deep-rooted collusive structure involving local politicians, a major architectural firm, and local contractors.

Overview of the Case and Charges Against the Former Gunei Executive

The corruption scandal involving the construction of the new Kiryu City Hall in Gunma Prefecture has dealt a severe blow to public trust in the integrity of local government bidding processes. At the heart of the scandal is the October 2022 bidding for the new Kiryu City Hall construction project, which was conducted as a conditional general competitive bidding process. Prosecutors allege that Gunei’s former Senior Managing Director, Norio Arai, along with other co-conspirators, rigged the bid to ensure that a joint venture (JV) led by Kanto Kensetsu Kogyo would win the contract. Gunei, based in Ota City, Gunma Prefecture, had planned to participate in the project as a subcontractor under the Kanto Kensetsu Kogyo-led JV and sought to secure local construction credentials. This government-ordered bid-rigging scheme led to the arrests and indictments of prominent figures, including Takafumi Aizawa, a former Gunma Prefectural Assembly member representing Kiryu, and Takahiro Moriyama, the former Deputy Mayor of Kiryu City.

Chronology of the Pre-Bid Collusion leading to the October 2022 Bid

The groundwork for the bid-rigging scheme was meticulously laid more than a year before the bidding took place. On May 12, 2021, representatives from Gunei, Kanto Kensetsu Kogyo, Kume Sekkei (the design and bidding support consultant), and assemblyman Aizawa met at Gunei’s headquarters in Ota City. During this meeting, they demanded that Kume Sekkei adjust the bidding specifications and evaluation criteria—specifically the evaluation metrics—to favor the Kanto Kensetsu Kogyo JV. Subsequently, in June 2021, Kume Sekkei employees emailed draft bidding documents to Hidemitsu Ishihara of Kanto Kensetsu Kogyo, who directly revised the criteria. By watering down requirements such as past seismic isolation construction experience and adjusting points to disadvantage their rival, Sata Kensetsu JV, they manipulated the bid in their favor. Kume Sekkei then submitted these tailored specifications to Kiryu City on July 21, 2021, cementing the fraudulent structure. Refer to the structural chart below for details.

Collusive Relations and Testimony Revealed in Court

Backroom Meetings and the Exploitation of Political Influence

During the trials at the Saitama District Court, dramatic testimonies from various co-conspirators have brought the collusive relationship between the political and business sectors to light. In June 2026, testifying in the trial of former assemblyman Aizawa, Gunei’s former Senior Managing Director Norio Arai admitted that he had requested Aizawa’s presence at meetings with Kume Sekkei, stating, “I thought Assemblyman Aizawa’s presence would exert pressure on the design firm.” Arai also noted that in the local construction industry, “design firms hold the supreme position,” indicating that they leveraged political influence to level the playing field. Furthermore, testimonies revealed that prior to the official selection of the design consultant, Gunei’s leadership hosted a dinner with then-Deputy Mayor Moriyama to lobby for Kume Sekkei’s appointment, intending to create “indebtedness” that Gunei could later exploit to secure subcontracting work on the actual construction phase.

The Defense’s Legal Arguments and Gunei’s Claim of Innocence

While other co-conspirators have pleaded guilty, Gunei’s Norio Arai has maintained his innocence, leading to a fierce legal battle with the prosecution. The defense team argues that the bidding process itself was inherently unlawful from the start. They point to the fact that back in 2020, then-Deputy Mayor Moriyama accepted bribes in exchange for selecting Kume Sekkei as the design consultant, establishing a pre-arranged framework to steer the main construction contract to the Kanto Kensetsu Kogyo JV. Therefore, Gunei’s defense contends that the October 2022 bid was a mere formality—essentially a negotiated contract (disguised as a competitive bid)—and does not constitute a “fair public bidding process” protected under criminal law. Conversely, the prosecution maintains that Gunei’s direct and systematic modifications to the evaluation criteria severely undermined public market competition, making it a highly malicious act.

Corporate Fallout and the Path Toward Administrative Reform

Suspension of Bidding Privileges and the Excess Political Donation Scandal

The fallout from the scandal has severely disrupted Gunei’s business operations and triggered further investigations into illicit political funding. Following Arai’s arrest and indictment, Nikko City in Tochigi Prefecture slapped Gunei with a five-month suspension from bidding on public works projects, running from December 25, 2025, to May 24, 2026. Furthermore, a separate investigation revealed that Gunei had made extensive political donations totaling 12.04 million yen to 12 different political branches, including those led by prominent Liberal Democratic Party (LDP) and Komeito figures in 2023. Under the Political Funds Regulation Act, corporations with Gunei’s capital size of 100 million yen are strictly capped at 7.50 million yen in annual donations. By exceeding this limit by 4.54 million yen, Gunei and its representative director were criminally accused by a university professor at the Maebashi District Prosecutors Office. For a visual breakdown of the financial impact and donation caps, see the diagram below.

The Third-Party Investigation and Future Outlook for Administrative Reform

In response to the severe damage to local government credibility, Kiryu City established an independent third-party verification committee in January 2026. Led by Kenichi Yada, a lawyer from the Gunma Chuo Law Office, the three-member committee is reviewing criminal trial records to investigate the systemic failures that allowed this collusion and to formulate robust preventative measures. The committee is slated to submit its final report to Kiryu Mayor Keiji Araki by March 2027. As the trials of Arai and Aizawa continue to unfold, and as prosecutors look into Gunei’s illegal political donations, the case remains a critical benchmark for the future of transparency and compliance in regional public procurement.

References

• 【Kiryu City Official Website】https://www.city.kiryu.lg.jp/

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