Photo/Illutration A document obtained by The Asahi Shimbun shows how infrastructure ministry officials instructed prefectural government workers to rewrite construction contract figures. (Yosuke Fukudome)

Infrastructure ministry bureaucrats instructed local government officials to inflate construction contract figures for the past eight years, an “egregious” and possibly illegal act that likely distorted key economic statistics, an Asahi Shimbun investigation revealed.

Ministry officials have admitted that such instructions were given, and that the contract figures were inaccurate.

The construction contract figures are defined as “fundamental statistics” and are used to calculate other important data, such as gross domestic product.

In fiscal 2020, total construction contracts reached 79.598 trillion yen ($700 billion), according to the Ministry of Land, Infrastructure, Transport and Tourism.

The ministry calculates the figure based on a sample of about 12,000 construction companies around the nation chosen for a one-year period from the 480,000 or so construction companies in total.

In principle, the selected companies are obligated to submit monthly reports about the monetary figures of the contracts they received for that month. The aggregated figures are used to estimate the total amount of construction contracts.

The Asahi Shimbun found that infrastructure ministry officials handed out instructions to prefectural government workers who actually collected the monthly reports on what to do if a company was late in submitting its figures.

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The Asahi Shimbun

Instead of listing “zero” for the month when no report was submitted, prefectural government workers were told to use the average figure of all the companies that did submit reports.

When the company in question finally submitted its report, the figure for the month when it failed to provide the number was included in the total figure for the latest reporting month.

But since the average figure was already used as that company’s amount for the unreported month, the result was a double-counting of the amount of contracts received by the company.

According to several infrastructure ministry sources, about 10,000 reports were rewritten in such a way every year.

However, the practice was stopped in April this year because, as one ministry source said, “It did not appear to be appropriate.”

“Inappropriate” may be an understatement.

The Statistics Law, for example, contains penalties for the deliberate falsification of statistics during the collection stage.

Hideaki Hirata, a professor of macroeconomics at Hosei University who previously worked in statistic compilation at the Bank of Japan, called the latest revelation an “egregious and unheard-of” example.

“No one will trust government statistics,” Hirata said. “I am stunned by the fact that the ministry took the initiative” for the falsifications.

The ministry section in charge of the construction industry statistics admitted to giving instructions to rewrite the data, resulting in the total figures being inflated.

However, ministry officials also said they had no idea why or when the practice started because it went so far back that it was difficult to trace.

LESSONS NOT LEARNED

In late 2018, it was revealed that faulty methods were used to compile the Monthly Labor Survey reports that were the basis for determining unemployment benefits, among other things.

In that case, the Tokyo metropolitan government used a sample of companies to compile the data rather than survey all companies with at least 500 employees as it was supposed to do.

Following that revelation, all central government ministries were instructed to review their methods of collecting fundamental statistics.

Although the rewriting of the construction contract figures was going on at that time, the infrastructure ministry did not acknowledge any questionable methods being used.

The ministry even said on its website that the statistics in question were intended to obtain basic records for various economic and social measures.

It added that the statistics were used to compile important indexes, such as the Monthly Economic Report released by the Cabinet Office.

(This article was compiled from reports by Yoshitaka Ito, Shuhei Shibata and Yuki Okado.)

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