From July 29 to September 9, the City of Sapporo held a public information session on its bid to host the 2030 Olympic and Paralympic Winter Games in Sapporo, Hokkaido.
This was one of the citizen dialogue projects organized by the city to explain to the public the significance of the bid for the Olympics, the plan for hosting the Olympics, and the contents of the interim report on the draft revision of the Olympic operation, as well to listen to their concerns, anxieties, and opinions.
Furthermore, in response to the issues that occurred at the Tokyo 2020 Summer Olympics, the City of Sapporo submitted an interim report for their “Draft Revision of Olympic Management for the Sapporo, Hokkaido 2030 Olympic and Paralympic Winter Games” at the special committee for the investigation of the Olympic and Paralympic Winter Games held on July 7, 2023.
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Excerpt from “Draft Revision of Olympic Management for the Sapporo, Hokkaido 2030 Olympic and Paralympic Winter Games”
Overview of major incidents related to the Tokyo 2020 Olympics and possible background and factors
- Charges of bribery in connection with sponsor selection
[Concern]
After the Tokyo 2020 Olympics, a former director of the Organizing Committee and a representative of a sponsor company that was an official supporter were arrested and indicted on charges of bribery. According to press reports, a former board member from a major advertising agency approached the company that handles negotiations for sponsor selection as a full-time agency, as well as the marketing bureau of the Organizing Committee, to which many of the company’s employees had been transferred, in order to facilitate the selection of sponsors, sponsorship prices, and other concessions in order to obtain favorable arrangements.
[Possible background and factors]
・It is possible that the sponsor company and the former directors themselves lacked recognition and compliance awareness of the fact that former directors are deemed public officials and are prohibited by law from accepting money and goods in connection with their duties.
・The criteria for selecting sponsors and the process leading to sponsor decisions were publicized, which may have made it easier for former board members to exert their influence.
・It is possible that the organizational structure was such that former board members from the sponsor company could easily exercise influence. This is due to the fact that while one major advertising agency was solely responsible for negotiating and discussing the details of contracts for selecting sponsors, the Organizing Committee’s marketing bureau, which was in a position to manage and supervise the full-time agency, was also largely comprised of employees transferred from the same advertising company.
・There are also reports that the decision on sponsors was left to the president by a resolution of the Board of Directors, and it is possible that the Board, which is supposed to be in a position to manage and supervise the operation of the Organizing Committee and the work of the directors, failed to fulfill its check function regarding the selection of sponsors.
- Allegations of order coordination (bid-rigging) in connection with outsourcing contracts for test event planning
[Concern]
After the Tokyo 2020 Olympics, the former deputy director of the Organizing Committee’s Olympic management bureau, 7 advertising agency executives, and 6 advertising and event companies were criminally charged and indicted by the Tokyo District Public Prosecutors Office and the Fair Trade Commission for violation of the Antimonopoly Act. According to press reports, the former deputy director and advertising agency executives coordinated the prospective contractors in consideration of the advertising and event companies’ desire to receive contracts, and the bids were awarded as coordinated. The successful bidder subsequently received orders for test event implementation and main event management for the Olympics under a negotiated contract, and it was reported that there are suspicions of bid rigging in the contracts for the main event as well, which is more expensive.
[Possible background and factors]
・It is possible that the staff of the Organizing Committee and other parties involved in the incident lacked understanding of what constitutes illegal bid rigging, or lacked awareness of compliance in the first place.
・There are reports that the coordination of contracts with each company was conducted through employees transferred from said companies to the Organizing Committee, and it is possible that improper staffing was a factor, such as the involvement of transferred employees in decisions on contracts involving the company from which they were transferred.
・There are reports that contract coordination was conducted to avoid contractual irregularities (failure to select a bidder), and it is possible that the time constraints caused by the tight schedule were a factor in fraudulent activities.
- Increase in organizing expenses
[Concern]
Regarding the expenses of the Tokyo 2020 Olympics, the candidacy file submitted by the Tokyo 2020 Olympic and Paralympic Bid Committee to the IOC in January 2013 originally indicated that the expenses would only reach 734 billion yen. However, the V1 budget announced by the Organizing Committee in December 2016 was 1.6 to 1.8 trillion yen. The final cost was reported by the Organizing Committee in June 2022 was 1.42 trillion yen, showing a significant increase in expenses compared to the original estimate.
[Possible background and factors]
According to the Tokyo 2020 Official Report by the Tokyo Organizing Committee of the Olympic and Paralympic Games, the following factors were cited as contributing to the significant increase in expenses from the original candidacy file.
・The expenses listed in the initial candidacy file were calculated according to the form provided by the IOC, extracting only the basic and common items to enable comparison of bidding plans among the candidate cities.
・At the time of the candidacy, the details of the convention operations had not been finalized, and only rough estimates of items that could be anticipated at that time were included.
・Additional expenses were necessary to cope with major changes in the environment surrounding the Tokyo 2020 Olympics that occurred after the decision on the host city was made, for example the threat of large-scale international terrorism and cyber attacks and the operation of additional competitions. In the candidacy file, only a very limited amount of money was allocated for expenses in the areas that were supposed to be handled by the government.
・Thus, the expenses indicated in the candidacy file did not represent the entire expenses required for the Tokyo 2020 Olympics, and the expenses were reportedly increased as a result of the calculation of the overall budget required after the Organizing Committee was established.
- Other concerns
A. Withdrawal of official emblem
According to the Tokyo 2020 Official Report by the Tokyo Organizing Committee of the Olympic and Paralympic Games, regarding the Tokyo 2020 Olympic emblem released in July 2015, in addition to the existence of works similar to the producer’s design being identified, the public criticized the fact that some designers were asked to participate in the selection prior to the public call and that the design selection process was unclear and secretive.
B. Inappropriate comments by officials
According to reports of inappropriate comments by Organizing Committee officials, the then Organizing Committee Chairman made inappropriate comments at a public forum in February 2021. In addition to the fact that he was forced to resign due to tremendous domestic and international criticism, the fact that he nominated his own successor after announcing his resignation also drew criticism, and the Organizing Committee established a candidate review committee to select a new president. Furthermore, there are reports that a number of members of the opening and closing ceremony production planning team resigned or were dismissed due to past bullying and inappropriate remarks, as well as for planning inappropriate staging of the ceremonies.
[Possible background and factors]
・There may have been a lack compliance awareness in key positions in the Organizing Committee.
・Fairness and transparency in the selection of board members and decision-making procedures for important matters may not have been sufficiently ensured.
City’s recognition of the current situation regarding the impact of the Tokyo 2020 Olympics and basic policy towards resolution of the issue
The following is a summary of the concerns and anxieties that have arisen among citizens as a result of the aforementioned series of events at the Tokyo 2020 Olympics, followed by the City of Sapporo’s basic policy for resolving these concerns.
- Concerns regarding reoccurrence of scandals amongst hotbed of fraud
Due to the many arrests of Tokyo 2020 Olympic Organizing Committee board members and staff as well as sponsor and advertising company representatives associated with the Olympics and various other scandals and criminal cases involving Organizing Committee officials, a sense of distrust has arisen that the Olympic and Paralympic Games themselves are hotbeds for fraud. In addition, there is concern that if the Olympics are held in Sapporo, the same kinds of fraud and scandals may occur and that certain parties and large corporations may gain unfair advantages.
[Fundamental policy]
We will establish an organizational structure that minimizes the risk of fraud and misconduct by ensuring compliance awareness throughout the Organizing Committee, including the chairman and directors, preventing the Board of Directors’ functions from becoming a mere formality, allowing the decision-making process to be more visible, and strengthening the checks and balances.
- Concerns regarding structure dependent on advertising agencies.
Allegations of bribery and bid-rigging for the Tokyo 2020 Olympics are reportedly suspected to have involved executives and employees of advertising agencies. Due to this, concerns have arisen that the Olympics itself is overly dependent on particular agencies and that this structure may be a breeding ground for fraud. Furthermore, there are also suspicions that the advertising agency that received the order for test event planning received the order for all subsequent event management services under a negotiated contract, which inhibited competition and resulted in high contract prices, leading to concerns about excessive reliance on advertising agencies.
[Fundamental policy]
We will review the way we engage with agencies in marketing projects and procurement to prevent excessive reliance on agencies and ensure proactive management by the Organizing Committee.
- Concerns regarding increased expenses and taxpayer funding
Due to the significant increase of the actual expenses for hosting the Tokyo 2020 Olympics from expenses indicated at the time of the bid, doubts have arisen as to whether the Olympics to be held in Sapporo will also incur more expenses than currently planned and whether taxpayer funds will be allocated to cover the increased expenses.
[Fundamental policy]
In addition to carefully explaining the budget to the public at the time of the bid, we will establish a system to properly manage budget execution and procurement in order to eliminate concerns about increased expenses and associated tax burden.
- Concerns regarding venue agreements and key decisions with the IOC
Under the Host City Agreement signed by Tokyo, the JOC, and the IOC when the decision was made to host the Olympics, the IOC, as organizer of the Olympics, had the right to make changes to the event types and categories, to cancel the agreement, and to cancel the Olympics if certain conditions were met, such as threats to the safety of the participants, and the host city was to bear the burden in such cases. This led to the concern that a similar agreement will be made when the convention is held in Sapporo, thereby leading to an increased burden on the host city, use of taxpayers’ money to cover the increased expenses, and a one-sided disadvantageous structure.
[Fundamental policy]
We will engage in ongoing dialogue with the IOC on issues of concern even before the decision is made and ensure a firm consultation system for the operation of the host city contract and decisions on important matters.
Specific review proposals (to be considered at this time)
Based on the issues listed up to this point and the basic policies to resolve them, the City of Sapporo believes that the 2030 Olympic Organizing Committee must implement the following items based on the points indicated in the governance guidelines, in addition to implementing all other items that are made mandatory by said guidelines. The following is a current draft and is subject to additions and revisions based on opinions obtained through the study committee, future citizen dialogues, and hearings with related organizations.
- Organization of the Board of Directors
[Major mandatory items in the governance guidelines]
・Assurance of appropriate size and effectiveness of the Board of Directors
・Establishment of a Board candidate selection committee to act as an independent advisory committee
・Implementation of training to strengthen compliance
[Sapporo proposal]
We will clarify the roles and qualifications of Board members and make the selection criteria and process transparent. Furthermore, some Board members shall be recruited from the public.
Since the selection of Board members who will be involved in important decision-making by the Organizing Committee is a matter of great concern to the public and will be the basis for clean event management, it is important to fairly and impartially appoint members who are familiar with practical matters and can properly manage and supervise the work of the Organizing Committee. Therefore, for the 2030 Olympics, the roles and qualities required of each Board member should be clarified in advance, taking into account the need to ensure gender and age diversity, and the selection criteria and process should be made public. In addition, consideration should be given to selecting some members through an open recruitment process.
- Management of conflicts of interest
[Major mandatory items in the governance guidelines]
・Establishment of a conflict of interest management system through the creation of a conflict of interest management committee
・Objectivity through the development of a conflict of interest policy
・Assurance of transparent procedures and appropriate personnel assignments for transferred staff
[Sapporo proposal]
Persons transferred from the private sector will not be placed at the heads of departments.
While the knowhow of staff transferred from private companies is useful for the smooth and appropriate operation of the convention within a limited preparation period, the need to prevent collusion between executives and specific companies and to ensure compliance makes it important to establish a system that guarantees fair final decision-making by the organizations involved in the contract. Therefore, for the 2030 Olympics, in addition to setting personnel allocation rules to ensure that executives and employees do not unfairly benefit against the Organizing Committee and that there is no bias in the number of employees transferred from the public sector and private companies, the Committee will consider not assigning employees transferred from private companies to head departments.
- State of marketing operations
[Major mandatory items in the governance guidelines]
・Establishment and operation of rules and regulations pertaining to sponsor selection policy and where the authority to make sponsor decisions resides
・Decisions on how marketing operations should be outsourced made according to the actual situation of the Olympics, disclosure of the process of consideration and reasons for selection
[Sapporo proposal]
To prevent excessive reliance on agencies, we will promote transparency in the selection of sponsors.
The sponsor selection process for the Tokyo 2020 Olympics was publicized, leaving a great deal of room for discretion by the agencies, which led to distrust that the event was a breeding ground for fraud. Therefore, in order to clarify the roles of agencies in sponsor selection and to strengthen the management and supervisory authority of the Organizing Committee over agencies, the Committee will consider making sponsor selection more transparent by disclosing in advance the sponsor selection criteria and selection process and having the sponsor selection committee, including outside experts, check the validity of the selection process when determining sponsors. The way in which outsourcing to agents is conducted will be carefully monitored, taking into account the advantages and disadvantages of the full-time agent system that was adopted for the Tokyo 2020 Olympics.
- Process of procurement
[Major mandatory items in the governance guidelines]
・Establishment of a procurement system that is conscious of conflict of interest management
・Establishment of a procurement system that takes into account the special characteristics of the Organizing Committee
[Sapporo proposal]
Contracts shall be awarded through competitive bidding in principle, with the scope of outsourced work appropriately separated.
With regards to procurement conducted by the Organizing Committee, it is important to establish a system that ensures competition and fairness and allows contracts at reasonable prices, in order to eliminate concerns about increased expenses and excessive reliance on advertising agencies. Therefore, in order to allow as many companies as possible to participate in the bidding process, the 2030 Olympics will use competitive bidding for outsourcing contracts and will consider appropriate separation of the scope of outsourced work in order to ensure rational and efficient procurement. In cases where competitive bidding is unavoidable, the Committee will consider having a third party verify the outsourcing cost, in addition to having a procurement management committee including outside experts deliberate on the matter to ensure that the procurement is done at an appropriate price.
5. Disclosure of information
[Major mandatory items in the governance guidelines]
・Proactive disclosure of information
・Examples of disclosure: information on the Board member selection process, procurement, bidding, marketing plans and goals, and total expenses related to publicly funded assistance at the Olympics
・The specific costs to be covered as “Olympics expenses” will be coordinated and organized in advance with the national and local governments
[Sapporo proposal]
We will proactively disclose and transmit information in a timely manner.
The Organizing Committee is an organization with great social influence, and in order to gain the trust of the public and society, it must not only disclose as much information as possible but also take the initiative to disseminate important information. Therefore, for the 2030 Olympics, in addition to proactively disclosing information that is not required by law, including executive selection criteria, selection process, and reasons for outsourcing marketing operations, the Committee will also consider timely dissemination of information, such as regular press conferences by the president and announcements of budget execution status as necessary.
- Guarantee of effectiveness
[Major mandatory items in the governance guidelines]
・Organization in advance of a specific response policy in the event that misconduct occurs or is discovered after the dissolution of the Organizing Committee
・Establishment of an environment in which those who become aware of violations can report them
[Sapporo proposal]
We will establish an external committee with strong authority to monitor and audit the Organizing Committee.
In order to minimize the risk of fraud and misconduct, it is important to ensure the effectiveness of various fraud prevention measures and to establish a strong checking system to confirm that these measures are functioning. Therefore, for the 2030 Olympics, the Act on Special Measures requires the government to establish an external committee with access to all documents in the possession of the Organizing Committee, including those that are subject to confidentiality obligations, and to consider establishing a system that allows a third party to monitor and audit the Organizing Committee. Furthermore, the Committee will consider strengthening the checks and balances function by establishing a system whereby external committees and the existing audit system can work together to monitor the Organizing Committee in a timely manner.
※ The governance guidelines state, “In cases where the Act on Special Measures is enacted in conjunction with the Olympic and Paralympic Games, it is one idea to establish an external committee or conference body composed of experts and to require the Organizing Committee to submit documents as requested by the external committee.”