On inappropriate handling of procurement accounting at KEKPressrelease
June 17, 2014
High Energy Accelerator Research Organization
We have discovered that at High Energy Accelerator Research Organization (KEK) some of the procurement accounting in JFY2013 had been inappropriately handled, i.e. payments to contractors were done for some contracts in full, although not all the items to be procured were fully delivered on schedule within the fiscal year. We consider that this is a completely unacceptable act for a laboratory whose operation essentially depends on public funds. We are in a process of detailed investigation on this matter, as well as on development of counter-measures to implement in prevention of similar incidents in the future.
On May 1, KEK received an anonymous surface mail which pointed out an existence of inappropriate accounting of some procurement contracts for items to be delivered toward the end of JFY2013. KEK immediately initiated a preparatory investigation and, with its preliminary report, KEK has set up an Investigation Committee on May 8. The Investigation Committee consists of 6 members from within KEK and 2 external members (a certified public accountant and a lawyer).
2. Tentative outcome of the investigation
The investigation committee requested KEK staff members to volunteer any information concerning instances of inappropriate procurement handling besides what has been reported in an anonymous letter earlier. As a result, the Investigation Committee identified approximately 40 instances (their total procurement amounts to about 1.9 BYen), and has performed a preliminary hearing on about 40 staff members of KEK.
At KEK the delivery of any procured items has to be confirmed first by the Delivery Inspection Center by comparing the items and the delivery statement, then by the supervising staff who have been assigned to ensure the contract for appropriate contract execution, and by the inspecting staff who has to ensure the integrity of the delivery. Their stamps or signatures have to be collected before the payment can ensue. With regards to the manufacturing contracts among the instances identified above, all such confirmation processes had been completed on paper.
The Investigation Committee have performed a hearing of representatives from the contractors involved and requested them to submit the relevant records and documents. Many of the cases, in which the delivery was incomplete at the end of JFY 2013, have actually seen the true complete delivery of items in or after April, or have the items presently under their final assembly processes. The Investigation Committee is looking into the details of their status.
The majority (approximately 90% in terms of the contract sum) of the contracts identified with inappropriate accounting handing (the procurement totaling about 1.9 BYen) had their contracts signed in September, 2013 or earlier. A combination of unexpected schedule delays and weak work-flow control is considered to cause the delays of their delivery. However, due processes prescribed to follow in such cases had not been appropriately followed.
We would like to add that no cases of fictitious transactions or illegitimate deposits have been identified in the investigation so far. The Investigation Committee so far has also looked into about 2,200 cases of contracts whose amounts exceeded 500,000 Yen and whose delivery was due in February or March of 2014. No inappropriate procurement accounting has been found with them other than those that have been described earlier.
3. Planned actions
We will be taking the following actions:
Factual investigation and confirmation by the Investigation Committee.
Request for expedited delivery of due items.
Disciplinary actions on those who were involved.
Investigation of more retrospective cases.
Development and implementation of preventive measures by an External Expert Council with inputs from the Investigation Committee.
We would like to extend our deep apologies to those who are concerned or affected.
Atsuto Suzuki, Director General