Kansai Electric's top two executives to resign over graft scandal

TOKYO (Reuters) - Kansai Electric Power Co Inc's 9503.T chairman and president said on Wednesday they would resign to take responsibility for a graft scandal that has rocked Japan's second-largest utility, in a reversal of their stated intention to stay on.

The announcement comes only a week after the pair said they would remain in their roles to regain trust after revelations that 20 company officials had received payments and gifts worth $3 million from a local government official.

Kansai Electric said Chairman Makoto Yagi’s resignation was effective Wednesday. President Shigeki Iwane will step down the day a third-party probe committee, set up on Wednesday, returns its findings, which the firm said it hopes will be by late December.

Bowing deeply at the start of the news conference, Yagi said he had changed his mind over the past week following criticism from clients and the general public, and decided that resigning to take responsibility was the right thing to do.

“I am deeply sorry for the disturbance this has caused,” Yagi said.

Osaka-based Kansai Electric's stock closed up 2.5% on Wednesday, versus a 0.6% decline in the benchmark Nikkei average share price index .N225, following earlier media reports of the planned resignations. The stock is still down about 13% since news of the scandal broke on Sept. 27.

“I believe it is my final responsibility to cooperate with the third-party committee to make sure a thorough investigation can be completed,” Iwane said.

Iwane previously said he and 19 colleagues had received payments and gifts worth 320 million yen ($3 million) from the late deputy mayor of the town of Takahama, where Kansai Electric has a nuclear power station.

An internal company investigation found the then-deputy mayor, Eiji Moriyama, exerted influence over local government officials and sought to influence them to support the local economy and use local businesses as suppliers.

The payments were disclosed after the matter was raised by the local tax bureau.

Takahama, a town of about 10,000 people in central Japan, had no comment on Kansai Electric’s findings about Moriyama, an official said on Wednesday.

Reporting by Chang-Ran Kim and Makiko Yamazaki; Editing by Christopher Cushing