Japanese advertising agency have been banned by the 2025 World Exposition in Osaka from bidding for contracts for the event ©Expo 2025

Dentsu is paying the price for its alleged involvement in bid rigging for contracts linked to test events prior to the re-arranged Olympic Games in Tokyo in 2021.

The Tokyo Metropolitan Government and Osaka Prefecture have suspended Japan’s largest advertising agency group Dentsu from bidding for Government contracts as the scandal continues.

The Japan Association for the 2025 World Exposition, which manages the Osaka Expo, and the city of Osaka, have also announced they will not award any contracts to the marketing giant which accounts for about 28 per cent of the national advertising budget.

The moves will see Dentsu suspended from bidding for contracts for one year, however, it does not apply to existing signed contracts.

Expo 2025, is due to take place from April 13 to October13 in two years, aims to have 150 countries participate and is expected to draw 28.2 million visitors, including about 3.5 million from abroad.

Currently 142 countries have said they will participate.

Officials in Osaka have admitted that the exclusion of Dentsu will have a big impact on the promotion of the 2025 World Expo ©Expo 2025
Officials in Osaka have admitted that the exclusion of Dentsu will have a big impact on the promotion of the 2025 World Expo ©Expo 2025

Hakuhodo, another massive Japanese advertising agency implicated in the Tokyo 2020 scandal, have also been excluded from bidding for contracts for Expo 25.

There are fears that Dentsu's absence could be a factor as numerous corporations decide whether to exhibit at the Expo, as well as make it more difficult to conduct an effective public relations campaign.

Osaka Governor Hirofumi Yoshimura, who took the decision to bar the two companies, admitted it would have a big effect on the event.

"There aren’t that many large Japanese advertising firms [like Dentsu and Hakuhodo], so excluding them from Expo contracts means there will be an effect on preparations," Yoshimura told Japanese reporters.

It is the latest twist in a crisis that started with the arrest last year of Haruyuki Takahashi, a former Tokyo 2020 Executive Board member and former Dentsu executive, on charges of accepting bribes in a broader corruption scandal.

Last month Dentsu and Hakuhodo were among six companies officially charged after receiving complaints from the Japan Fair Trade Commission.

Besides Dentsu, another advertising company Tokyu Agency and event production companies Cerespo, Fuji Creative. and Same Two were charged by the prosecutors.

They are alleged to have violated the anti-monopoly law by rigging bids for contracts worth approximately ¥40 billion (£249 million/$307 million/€283 million) to organise test events in preparation for Tokyo 2020 that was postponed by one year due to the COVID-19 pandemic.

Seven individuals have also been indicted, including former Tokyo 2020 operations executive Yasuo Mori and Koji Hemmi, a former executive at Dentsu, over their alleged involvement in the big-rigging scandal.

Mori and Hemmi were arrested earlier this month, along with Cerespo executive director Yoshiji Kamata and Fuji Creative executive director Masahiko Fujino, who have also been charged.

Tokyu Agency director Mitsuo Yasuda, Same Two representative director Masao Umino and Kenichiro Yokomizo, general manager of the sports division at Hakuhodo, are the other individuals to have been indicted in the case, according to the Japan News.

Dentsu is responsible for 28 per cent of the national advertising budget in Japan ©Getty Images
Dentsu is responsible for 28 per cent of the national advertising budget in Japan ©Getty Images

The offences are alleged to have taken place in 2018 when 26 open tenders to organise Tokyo 2020 test events were launched.

These were awarded to nine companies, including Dentsu and fellow advertising giant Hakuhodo Inc, for a total of ¥538 million (£3.4 million/$4.1 million/€3.82 million).

Takahashi faces four charges of bribery which reportedly yielded ¥198 million (£1.2 million/$1.5 million/€1.4 million) in return for helping companies secure sponsorship or marketing deals.

Former ADK Holdings President Shinichi Ueno last week admitted in court that he had bribed Takahashi.

The scandal is widely blamed for scuppering Sapporo's bid to host the 2030 Winter Olympic and Paralympic Games.

The Japanese city was favourite to be awarded the Games for a second time but the campaign was put on hold in December when the seriousness of the corruption crisis began to become apparent.