June 3, 2020 / 11:00 PM / a month ago

RPT-Japan's Dentsu gets $700 mln windfall from gov't SME aid scheme amid opposition criticism

(Repeats story published on Wednesday, with no change to text)

By Ritsuko Shimizu and Sam Nussey

TOKYO, June 3 (Reuters) - Japanese advertising giant Dentsu Group Inc 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.

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 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)

Reporting by Ritsuko Shimizu and Sam Nussey; Editing by Chang-Ran Kim and Christopher Cushing

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