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  SUNDAYISLAMIC STATE HIT LIST NATIONAL CHAMPIONS    Names, photos of U.S. military OSU wins its first wrestling    members posted online / A13 title in school history / C1   $2.00 MARCH 22, 2015 DISPATCH.COM    Price is $2.50 in areas outside Franklin County.

Campaign finances DISPATCH SPECIAL REPORT Explosion Millions Massive price-fixing scheme among mostly Japanese Big blast reported auto-parts manufacturers only part of has hurt U.S. car buyers, destroys spending cost the industry trust home in

By Jim Siegel THE COLUMBUS DISPATCH Arlington Donors gave more than $27.5 Mailman smelled million to majority Republican state lawmakers and caucus gas; as many as 30 committees in the last two-year cycle and $8.9 million to Dem- houses damaged ocrats. The oil and gas industry gave By Holly Zachariah about $1.2 million to Repub- and Dean Narciso licans, while charter-school THE COLUMBUS DISPATCH operators, short-term lenders, the beer and wine industry, After six years as a mailman utilities and others concerned in Upper Arlington, Tim Nel- about how they are regulated son has learned to notice little and taxed also were among the things along his route. But top GOP givers. yesterday was different. Those figures are impressive, “You smell gas daily. But that but they are only a portion of was strong,” Nelson said of the the money spent. Third-party On the Web See Donors Page A8  For more photos and a video from the blast site, visit Dispatch.com.

Buckeye Lake air outside the home at 3418 DEPOSITPHOTOS.COM Sunningdale Way. The odor became stronger at the gas meter. So he asked a Evacuation neighbor to call the gas com- pany. plans get It was just before noon. Nelson continued his rounds. And then, three hours later: new priority Boom. No one had time to do A culture anything but duck. By Lori Kurtzman The split-level home was THE COLUMBUS DISPATCH gone. Debris rained down. Flames shot into the air. It takes about 90 minutes to Nelson, a few blocks over, clear out the 60,000 visitors said, “I knew immediately who watch the Fourth of July of collusion what it was when it went up.” fireworks over Buckeye Lake. The closest neighbors took By Dan Gearino THE COLUMBUS DISPATCH Half of them take the same • cover. People who live as far as routes that residents would a mile away heard and felt the drive should the lake’s earthen he Japanese executives met at Cafe Renoir, blend- blast and said they ran outside dam fail. ing in with the crowd at the Tokyo coffee shop. • to see if a tree had crashed So what does that mean for a They represented competing makers of anti-vibra- onto their roof or a vehicle had potential evacuation of the tion rubber for cars and they were coming together careened into their home. area? T In the end, only minor in- to fix prices on parts made in the U.S. • The meeting was a Maybe a lot. Maybe very little. It all depends on the small part of a conspiracy that has grown to the largest price- See Big blast Page A6 scenario, county officials said fixing prosecution in U.S. history. So far, 33 companies have — and whether residents are pleaded guilty and agreed to pay $2.4 billion in fines, and the • panicked or prepared. investigation is ongoing. See Collusion Page A10 See Evacuation Page A4 A10 THE COLUMBUS DISPATCH TODAY’S TOP STORIES SUNDAY, MARCH 22, 2015 PRICE FIXING

Collusion The largest set of price-fixing investigations in U.S. history has ensnared 33 companies FROM PAGE A1 Auto-parts price fixing | and many of their executives, and investigators are not done. EXECUTIVES EXECUTIVES HOME EXECUTIVES PLEADED WHO ARE Consumers are the biggest COMPANY CRIMINAL FINE PARTS MANUFACTURED COUNTRY CHARGED GUILTY FUGITIVES losers as the collusion led to Aisan Industry Co. $6,860,000 Electronic throttle-control systems 0 0 0 higher prices for cars and Seiki Co. $35,800,000 Variable valve-timing devices Japan 0 0 0 trucks. In central Ohio, the cases Autoliv Inc. $14,500,000 Seat belts, air bags, steering wheels Sweden 1 1 0 have left deep wounds among Corp. $425,000,000 Anti-vibration rubber Japan 4 1 3 the cluster of Japanese busi- nesses that provide parts to Continental Automotive Electronics $4,000,000 Dashboard instrument-panel clusters South Korea 2 0 2 and Continental Automotive Korea , eroding trust between longtime partners. Three suppli- Corp. $78,000,000 Electronic-control units Japan 6 6 0 ers with plants in central Ohio Diamond Electric Mfg. Co. $19,000,000 Ignition coils Japan 2 2 0 have pleaded guilty, as well as a number of companies with area Fujikura $20,000,000 Wiring systems Japan 2 0 2 offices. Furukawa Electric Co. $200,000,000 Wiring systems Japan 3 3 0 The cases show some of the G.S. Electech, Inc. $2,750,000 Antilock-brake systems Japan 1 1 0 weaknesses in a supply network that has long been a strength for Automotive Systems $195,000,000 Starter motors, alternators, ignition coils Japan 4 0 4 Japanese automakers. And they Hitachi Metals $1,250,000 Brake hoses Japan 0 0 0 raise difficult questions about the role of Japanese business Jtekt Corp. $103,270,000 Ball bearings, electronic steering assemblies Japan 1 0 1 culture, and whether the illegal Koito Manufacturing Co. $56,600,000 Lighting fixtures Japan 0 0 0 conduct was going on long Mitsuba Corp. $135,000,000 Windshield washer/wiper systems; Japan 3 1 2 before prosecutors got involved. motors for starters, power windows and fans “Your honor, I truly regret what I did,” said Hiroshi Yoshi- Electric Corp. (MELCO) $190,000,000 Starter motors, alternators, ignition coils Japan 3 0 3 da, a midlevel executive for Mitsubishi Heavy Industries $14,500,000 Compressors, condensers Japan 0 0 0 Yamashita Rubber, a maker of anti-vibration rubber whose NGK Spark Plug Co. $52,100,000 Spark plugs, oxygen sensors, air-fuel ratio sensors Japan 0 0 0 U.S. subsidiary, YUSA Corp., has Nippon Seiki Co. $1,000,000 Instrument-panel clusters Japan 0 0 0 a plant in Washington Court NSK $68,200,000 Bearings Japan 1 0 1 House. He spoke at his 2012 sentencing hearing in a down- Panasonic Corp. $45,800,000 Battery cells Japan 1 0 1 town Toledo courtroom, before Sanden Corp. $3,200,000 Compressors used in air-conditioning systems Japan 0 0 0 heading to federal prison. “And I apologize to you and the Unit- Showa Corp. $19,900,000 Pinion-assist type electric-powered steering assemblies Japan 1 0 1 ed States, and also separately to Co. $1,440,000 Lamp ballasts Japan 0 0 0 my family, for what happened.” T.RAD Co. $13,750,000 Radiators Japan 1 1 0 At the hearing, his attorney described how someone from a Takata Corp. $71,300,000 Seat belts Japan 6 4 2 competing manufacturer Tokai Rika Co. $17,700,000 Heater-control panels Japan 1 0 1 recruited Yoshida into the con- spiracy. Nine people were in- Toyo Tire & Rubber Co. $120,000,000 Anti-vibration rubber, driveshaft parts Japan 3 1 2 volved from several companies. Toyoda Gosei Co. $26,000,000 Automotive hoses, air bags, steering wheels Japan 1 0 1 They met in Japan at places TRW Deutschland Holding GmbH $5,100,000 Seat belts, air bags, steering wheels Germany* 0 0 0 where they would not be recog- nized, such as coffee shops and Valeo Japan Co. $13,600,000 Air-conditioning systems Japan 0 0 0 in conference rooms at train Yamashita Rubber Co. (YUSA Corp.) $11,000,000 Anti-vibration rubber Japan 1 1 0 stations, the attorney said. There were dozens of separate Corp. $470,000,000 Wire harnesses Japan 6 6 0 conspiracies, carried out over *Subsidiary of a U.S. company Source: U.S. Department of Justice more than a decade, affecting THE COLUMBUS DISPATCH more than 25 million vehicles purchased by U.S. consumers, according to prosecutors. To put Central Ohio ties He described a culture in that number in perspective, it is which decisions were made by Some of the central Ohio roughly 1.5 times the vehicles businesses with ties to the Japanese executives, often sold in the country last year. price-fixing cases, including Honda, working with Japanese exec- “The bottom line is that which is a victim: utives at other companies, and Americans paid more for their in which competitors were used 71 cars as a result of this collusion,” EASTEASTLT LIBERTYLIBERTYY SUNBURYSUNU BURRY to working together. said Marvin Price, criminal MARYSVILLEMARYSVILLE AmericanAmericmerm anan Meanwhile, the many Amer- director of the Department of HondaHondnda off AAmAmericamem ricaa ShowaShhoowaowo ˙ ican employees of the compa- Justice’s antitrust division. Manufacturing nies, even high-level employees, How much more did consum- 33 felt shut out from big decisions. ers pay? We don’t know. 161 In the price-fixing cases, this Yazaki North turned out to be a good thing. Oceans apart America All but one of the 54 people The cases have the makings of 70 ˙ charged are Japanese. (The a sensation: big numbers, be- ˙ 270 exception is Gary Walker, a trayal, secrecy, and all of it relat- LONDON -based sales executive ed to a product that most peo- Stanley Electric for Takata Corp., who declined U.S. Co.. ple use every day. And yet, the to be interviewed.) reaction and interest in the “We read about it along with 71 WASHINGTONHINGTONG United States has been muted. COURTRT HOUSEH everyone else,” said a top man- To get a more intense response, YUSAA Corp.o KYLE ROBERTSON DISPATCH ager for one of the companies you need to look to Japan. ˙ 10 MILES Yazaki Corp., which has an office on the Far West Side, admitted that pleaded guilty, a U.S. citi- “The Japanese media and THE COLUMBUS DISPATCH to price fixing and was fined $470 million. zen, speaking on condition of public (were) surprised very anonymity because he was not much for the past three or four well as the auto-industry cul- companies to be the first to “Some of the people who authorized to comment. “It years whenever individuals, ture.” come forward and provide in- (received leniency) were some hurts perception of us here. We executives in companies, were The prison sentences were a formation about others. This of the evil, evil people in this had nothing to do with it.” imprisoned in the U.S.,” said surprise, he said, because many leniency program means that thing,” said a midlevel manager His frustration underscores Hideto Ishida, a leading anti- executives considered this con- some offenders get away with for one of the companies that long-standing tension within trust attorney in Tokyo, in an duct to be merely an “adminis- no charges and no public dis- pleaded guilty, a U.S. citizen, many of the companies. “I’ve

• email. “Yes, the auto-parts cases trative offense.” closure of their roles, a fact that speaking on condition of ano- always been told that the Japa- have a long-term and great Prosecutors cracked the case is galling to many of the compa- nymity because he was not effect to the Japanese culture as in part by offering incentives for nies that were charged. authorized to comment. Continued on Page A11 THE COLUMBUS DISPATCH TODAY’S TOP STORIES SUNDAY, MARCH 22, 2015 A11

Continued from Page A10 motive News said that some of the fugitives continue to work nese hold the power,” said Mike for their companies in Japan. Tanner, a retired executive for a The Dispatch reached out to U.S.-based parts supplier who each of the companies to ask if teaches management at Fisher this is so. Most of the compa- College of Business at Ohio nies did not respond, and near- State University. “They put the ly all that did declined to go into Americans there to talk to the specifics about the employees. Americans, the American sup- pliers and the American em- More to resolve ployees.” The prosecutions of compa- Tanner spent five years on the nies and individuals are contin- outside at Honda, trying to get uing, with the most recent in- the automaker to consider buy- dictments announced last ing his company’s brake hoses. month. Meanwhile, there are He found that the major Japa- dozens of civil cases in which nese automakers — Honda, groups of consumers, car deal- and — remained ers and others are trying to win loyal to Japanese partners, even damages from the parts suppli- when some of the suppliers had ers. high costs. Another big, unanswered He now thinks that some form question is about the automak- of price-fixing had been hap- ers: Did they know or suspect pening for a long time in the price-fixing? Japanese parts networks. “You BALCE CENETA “How could they not know?” always knew there had to be Attorney General Eric Holder talked last year about the auto parts made by alleged conspirators. asked Rosman, the former something going on. You just prosecutor. “It is likely they didn’t know what it was,” he The pressure to cut costs knew many of their suppliers said. What is price fixing? How did price-fixing work became so great that companies communicated (with each Eventually, Honda began were making bids that left little other). In fact, some carmakers buying a small share of hoses Price fixing is when competitors in the auto-parts cases? room for profit. And that was a may have encouraged suppliers from Tanner’s company. In work together to set prices or When automakers prepare to key driver for the escalation in to communicate.” hindsight, he thinks Honda was bids, rather than allowing launch a new or redesigned mod- illegal activity. Just about every major auto- using his company’s bids as market forces to work. This el, they ask parts suppliers to “They all have this problem in maker was affected, with Toyo- leverage to get price conces- often results in higher prices, submit bids to make certain parts. common, and that’s what brings ta, Nissan and Honda men- sions from longtime suppliers. although it also can include The automakers usually split them together,” said Philip tioned most frequently as vic- He found it eye-opening that agreements to make prices low their orders across a group of Giordano, a former Department tims in court documents. Toyo- Honda needed to go to such or stable. The federal govern- suppliers with whom they have of Justice prosecutor who ta and Nissan declined to great lengths to get reasonable ment has broad power to previously done business, and worked on some of the auto- comment. prices. prosecute price fixing under the negotiate the final prices for all parts cases and now works for a “At Honda, we believe in — The parts-supply network was Sherman Antitrust Act of 1890, participants based on the lowest Washington, D.C., law firm. and count on — fair and open an almost ideal situation for a law that Congress said was bids. In these cases, parts manu- Managers for parts manu- competition,” said Tom Lake, illegal activity to develop, said “aimed at preserving free and facturers met in secret to plan their facturers became more brazen Honda vice president for North Mark Rosman, an antitrust unfettered competition as the bids and make sure no bid was working together to rig bids. The America purchasing, in an attorney who spent 20 years at rule of trade.” too low. The result was higher conspiracies grew and seemed email. “We feel strongly that our the Department of Justice and is costs for the automakers, which to reach their apex at around the suppliers, and all we do busi- now in private practice. Sources: Federal Trade Commission, translated to higher costs for time of the 2008 economic ness with, abide by all laws and “You’ve got very close and U.S. Department of Justice consumers. downturn. operate in an ethical manner. long-standing relationships And then it all fell apart. We believe this is the best way between the supplier and the Working from initial tips, to run our business. Honda has carmaker in many of these A few months later, in Febru- national company. The site investigators blew the cases and will continue to cooperate cases,” he said. “On top of that, ary 2010, the FBI conducted serves as the main sales and open by providing inducements with this investigation.” the Japanese business culture is raids at plants and offices of at service office for dealing with for companies to be the first to While the investigations more collaborative than the U.S. least three companies that make Honda, and a warehouse. come forward. The government move forward, many of the business culture, and it should automotive wire harnesses, There are almost no details in was able to do this because of a participants have served their be taken into account when systems that connect a car’s the public record about the leniency program started in the time, paid their fines and re- investigating communications various electronic components. structure of the wire-harness early 1990s, a tool that never had turned to Japan. among competitors. That cul- Among the companies was conspiracy, other than vague been used to this extent. Hiroshi Yoshida, the Yamash- ture plays into this conduct Yazaki Corp., which got surprise statements about how the par- In addition to company sanc- ita Rubber executive in the significantly.” visits from federal agents at ticipants used code names and tions, 28 executives pleaded Toledo courtroom, was sen- He is talking about a culture locations in three states, in- met at remote locations. A Yaza- guilty to individual charges and tenced to a year in federal pris- that is collegial, in which com- cluding at its offices on Fisher ki spokeswoman declined to most of them went to federal on and a $25,000 fine. He was petitors see one another at trade Road on the Far West Side. comment, citing ongoing civil prison. released in December 2013. shows and outside work and Yazaki was the second com- litigation. An additional 26 executives Attempts to reach him for com- share drinks and talk business. pany to plead guilty, with a deal have been indicted but have not ment were unsuccessful. This is in contrast with an Amer- made public in January 2012. How we got here surrendered to authorities. They This story goes into specifics ican culture that tends to be The company agreed to pay A century ago, when auto include Akira Wada, a former about Yoshida because he tight-lipped and competitive. $470 million, which remains the manufacturing was becoming a sales manager for Showa Corp., worked near central Ohio and The idea of a Japanese-Amer- largest single penalty in these big business, the largest players who was indicted in October. because documents in his case ican culture clash is a sensitive cases and the third-largest of made most of their own parts. His company’s U.S.-based sub- had more details about the one, touching on what each side any antitrust case in U.S. histo- Companies such as Ford made sidiary, American Showa, has a conspiracy than those in other might view as stereotypes. It is ry. (The largest was $500 million rubber and fabricated steel in plant in Sunbury. An attorney court proceedings. particularly touchy in Ohio, paid in 2012 by a Taiwanese one giant, vertically integrated for Showa declined to comment. He is not unique. He is one of which has a disproportionately maker of LCD monitors. The business. One of the big unanswered many Japanese managers who large presence of Japanese- same amount was paid in 1999 Japanese automakers up- questions is what the Justice were living far from home and owned companies, many of by a Swiss maker of vitamins.) ended this system by setting up Department will do with these doing what they thought was which have ties to Honda. The amount of the fine was something called keiretsu, net- fugitives. best for their companies. Once As of last fall, Japanese com- based on guidelines that the works of interlocking suppliers “Certainly one of the options caught, he seemed genuinely panies had 422 locations in the penalty be double the com- that shared costs and risks. we will consider will be extradit- apologetic. state and 70,985 jobs, according pany’s financial gain from the Sometimes the automakers ing them from the country But there is no sympathy to the Consulate General of illegal activity, or double the even had ownership interests in where they are located,” said from government investigators. Japan in Detroit. financial loss to consumers. the suppliers. It was like a close- Price, criminal director of the “The typical motivator for Money from the fines is placed knit family. department’s antitrust division. people to do this kind of activity Heavy fines in a federal victims’ assistance This family-like relationship Until last year, the Justice is greed,” said Price, from the Some of the first signs of the fund. went on for decades. Then, in Department had never extradit- Department of Justice. “They investigation were in late 2009. Although most consumers the late-1990s and early 2000s, ed someone in an antitrust case. want more money, (and) they That was when a whistleblower have not heard of Yazaki, it is a the ties began to be strained. That changed with the arrest in are going to have a more suc- approached Canadian regu- giant player in auto parts, with Automakers became more ag- Germany of Romano Pisciotti, cessful career if they are able to lators and provided information more than $15 billion in annual gressive in asking vendors to cut an Italian national. He later make more money for the com- in exchange for immunity from sales. costs, and brought on new sup- pleaded guilty to price-fixing in pany.”

• prosecution, according to a The company’s Far West Side pliers — such as Tanner’s com- the sale of hoses used on oil dgearino@ report in Global Competition office, which employs 53 people, pany — to compete with the old tankers. dispatch.com Review, an antitrust-law journal. is a small outpost for the multi- ones. A November report in Auto- @DanGearino