Large companies are hit by the clean-up work at the Olympic Games in Tokyo

A few months after last year’s Tokyo Olympics, a liquidation company in Osaka quietly began work that no one would admit was needed: dumping truckload after truckload of fluffy toys, branded clothing and other trash from the most heavily sponsored sporting event in history.

Part of the mountain of goods – created for an event that cost twice as much as originally planned and took place without spectators – was sent to poor Cambodian villages. Some have been donated to local child care organizations while others have sold for a tiny fraction of the original price.

But since the summer, Japan has embarked on a much bigger, much darker, and much more public post-Olympic purge: a rapidly expanding investigation into alleged sponsorship-related bribery that has engulfed well-known companies and put top executives behind bars.

Haruyuki Takahashi, a powerful member of the Tokyo Games organizing committee and a former executive at Dentsu, Japan’s largest advertiser and arguably the country’s most influential company, has been in custody since August.

Takahashi’s arrest sparked internal panic over whether all sponsors would be scrutinized for an event that ended up generating almost no commercial benefit, people from two of the Games’ “gold” sponsoring companies said.

The founder and former chairman of Japan’s largest business suit maker, Aoki Holdings, was also arrested in August, followed last month by the chairman of Kadokawa, a major publisher closely involved with the games.

Even Sun Arrow, which produced the unsold fluffy mascots, is reportedly being investigated for how it got the right to do so. Sun Arrow declined to comment.

“This is a clean-up, plain and simple, and it’s going to take more minds,” said a person close to one of the few games-related companies whose offices were raided by prosecutors this year.

Unless Japan fully dealt with the alleged corruption at the Tokyo Games, it would be unlikely to succeed in its bid to host the northern city of Sapporo’s Winter Olympics in 2030, the person added.

Long before the Olympic torch reached Tokyo last July, questions had been raised about the role of Dentsu, a company on which the Games organizers leaned heavily as they secured around $3 billion in sponsorship money and set about making one hosting the most expensive games of all time.

The advertising giant has admitted it is under investigation by prosecutors, as have smaller competitor ADK and parking company Park24.

Dentsu was hired in April 2014 and has attracted more than 40 Japanese companies to become sponsors. In the battle to compete, sponsors accepted non-exclusive deals, paid a fortune, but often had to share the privilege with their main competitors.

Ultimately, the sponsorships brought little financial benefit after the games were postponed by a year due to the corona pandemic and then played without spectators.

A poll conducted shortly after the event by the Nomura Research Institute found that only 2.6 percent of 3,564 people surveyed had purchased any official merchandise made for the event.

“Our initial plan was to print and sell the official guidebook and other printed materials, so there was an estimate that if everything was sold, that would make a profit,” Kadokawa President Takeshi Natsuno said on a news release last week Press conference after the indictment of Kadokawa the publishing chair.

“The Olympics were held without spectators and as a result there was no significant gain,” Natsuno added.

Tsuguhiko Kadokawa, the chairman of Kadokawa, resigned from his role following his indictment but has maintained his innocence.

According to a report by an outside legal panel released by Kadokawa, the company’s legal team had previously raised questions about the legality of payments made in 2019 to an acquaintance of Takahashi.

“There were suspicious acts that could be considered bribery,” Tadashi Kunihiro, the panel’s head, said last week.

Prosecutors alleged that Takahashi, who left Dentsu in 2009, received bribes totaling 142 million yen (US$980,000) from Aoki and Kadokawa, as well as advertising agency Daiko, which is suspected of paying Takahashi and acquaintances, to gain a role in the sponsorship process.

Takahashi could not be reached for comment but has repeatedly denied allegations of bribery. Aoki said in September it would continue to work with authorities after the charges against its chairman, who could not be reached for comment. Daiko said it will be fully cooperating with investigators after one of its executives was arrested last month.

Taisuke Matsumoto, a sports law expert at Waseda University, said Japan must end the role of middlemen like Takahashi in selecting sponsors if it wants to host the 2030 Winter Olympics.

“A host organization needs independent oversight to enhance leadership leading up to the Sapporo Games,” Matsumoto said.

Back in Osaka, the Shoichi liquidation company managed to salvage some of the value of the games’ merchandise. But company president Shoichi Yamamoto has criticized the organizers of the games, saying some sponsors were left with huge inventories after their contracts ended late last year and had no choice but to throw away their wares.

“It sounds irresponsible that the Games’ organizing committee should disband without dealing with unsold inventory, even though the Games emphasize sustainable development goals,” Yamamoto said.