Photo/Illutration The Board of Audit of Japan in Tokyo’s Chiyoda Ward (Asahi Shimbun file photo)

A Dentsu Group Inc. company said it will return about 110 million yen ($705,000) it received from overbilling the health ministry for a medical project during the COVID-19 pandemic.

The overcharges, made mainly by inflating the number of people involved in the work, were uncovered in an investigation by the Board of Audit of Japan.

The investigation also found that another group company of Dentsu, Japan’s largest advertising agency, had been subcontracted for the project, and it had outsourced the work to other firms.

But the ministry was not informed of the involvement of one of the subcontractors, a violation of government contract rules.

In May 2020, the ministry signed a discretionary contract with Dentsu Tec, based in Tokyo’s Minato Ward, for the creation and operation of the Gathering Medical Information System on COVID-19 (G-MIS).

Through G-MIS, medical institutions could notify local governments of the number of medical staff on hand and whether they could secure sufficient medical supplies, including cloth masks, during the pandemic.

The ministry paid Tec about 860 million yen to develop the system and operate a related call center.

Tec subcontracted the work to another group company, Dentsu Customer Access Center Inc. (Access).

In 2024, the Board of Audit found that Tec and Access overbilled the ministry by about 110 million yen by listing expenses for fictitious personnel at the call center.

In an interview with The Asahi Shimbun, Tec acknowledged that Access had further outsourced part of the call center operations to a Tec subsidiary, My Data Intelligence (MDI).

The ministry was not notified of the outsourcing to MDI.

Companies are obliged to notify the government if they outsource work in government-ordered projects. This rule is enforced to clarify who should be held responsible in the event of an accident.

If companies violate the obligation, they may have to pay for damage compensation.

“We neglected to check and failed to report the name of the company that was subcontracted,” Tec said.

MDI was a personal information bank started by the Dentsu Group in 2018. It was dissolved in September 2021.

“We needed to establish a strict information management system amid expected confusion at medical institutions due to the COVID-19 pandemic,” Tec said. “So, we considered it necessary to seek guidance and cooperation from MDI, which has expertise in the information trust business.”

The Board of Audit believes a portion of excess payment from the ministry ended up with MDI.

Tec said it intends to return the 110 million yen to the ministry.

“We are not considering any disciplinary action against the company, as it is scheduled to return the money,” a ministry official said.

This was not the first overbilling incident connected to the Dentsu Group concerning the pandemic.

In 2023, Dentsu Hokkaido Inc. was found to have overcharged the Hokkaido government by 158 million yen in contract fees for work related to COVID-19.

According to Hokkaido officials, Dentsu Hokkaido subcontracted the work to Access, which falsified work records.

The Board of Audit found the discrepancies in an on-site inspection.

Tec is now Dentsu Promotion Plus Inc., while Access is now Dentsu Promotion Exe Inc.

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