Japan's Dentsu gets $700 mln windfall from gov't SME aid scheme amid opposition criticism
03/06/2020 10:02
By Ritsuko Shimizu and Sam Nussey
TOKYO, June 3 (Reuters) - Japanese advertising giant Dentsu
Group Inc 4324.T has received almost $700 million via a
government contract to provide back-office services for a scheme
to help virus-hit firms, under a framework opposition lawmakers
called "opaque".
Dentsu received 97% of the 76.9 billion yen ($707 million)
awarded via a tender to a company it co-founded to support the
Ministry of Economy, Trade and Industry's relief fund for small
and mid-sized enterprises (SMEs), showed a government document
seen by Reuters.
Opposition politicians have questioned whether the contract
with Service Design Engineering Council - and its arrangement
with Dentsu and its multitude of subcontractors - is a waste of
taxpayers' money and could slow the process of channelling funds
to eligible recipients.
Dentsu, echoing a statement from Service Design Engineering
Council, told Reuters it was performing duties in line with
government guidelines and had operations in place to help
disburse the funds as swiftly as possible.
Scrutiny of the use of private companies to run the relief
scheme comes as Prime Minister Shinzo Abe's support rate has
slid, partly due to his handling of the pandemic which critics
have called clumsy.
Japan is emerging from government restrictions on movement
and business aimed at curbing the spread of the new coronavirus,
having recorded 17,000 cases of COVID-19 - the respiratory
illness caused by the virus - and over 900 deaths.
Like the SMEs targeted by the relief fund, Dentsu has also
been impacted by the lockdown measures. Particularly painful for
the firm was the virus-induced delay in the Tokyo 2020 Olympics,
in which it has a central part. urn:newsml:reuters.com:*:nL4N2D91H3
Dentsu plays an outsized role in Japan beyond its dominance
of the advertising industry, including providing services to the
government.
It established Service Design Engineering Council in 2016
with staffing firm Pasona Group Inc 2168.T and IT firm
Transcosmos Inc.
Dentsu is subcontracting some work from the latest contract
to Pasona and Transcosmos, the government document showed.
Pasona and Transcosmos did not immediately respond to
requests for comment.
($1 = 108.7300 yen)
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Dentsu's Olympic year torpedoed by coronavirus outbreak
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(Reporting by Ritsuko Shimizu and Sam Nussey; Editing by
Chang-Ran Kim and Christopher Cushing)
((sam.nussey@tr.com; https://twitter.com/SamNusseyRTRS;
+81345632760;))