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Shinzo Abe

Ex-head of scandal-hit Japanese school operator arrested over subsidy fraud

Moritomo Gakuen and its former head first came under the spotlight for purchasing state-owned land to build the elementary school for just a fraction of its appraisal price

PUBLISHED : Monday, 31 July, 2017, 6:48pm
UPDATED : Monday, 31 July, 2017, 9:10pm

Prosecutors on Monday arrested the former chief of the scandal-hit Moritomo Gakuen over the illegal receipt of public subsidies for its school businesses.

The arrest of Yasunori Kagoike, 64, followed a scandal involving a controversial land deal linked to Prime Minister Shinzo Abe. The school operator won a huge discount for the state-owned land to build an junior school, for which Abe’s wife Akie was named honorary principal.

Prosecutors questioned Kagoike and his wife Junko, 60, on Monday afternoon after quizzing them for the first time last Thursday. Junko served as a senior official at schools run by the operator.

The Osaka District Public Prosecutors Office’s special investigation squad launched a probe into the Kagoikes after it received a complaint in March that the school operator unlawfully received state subsidies worth about 56 million yen (US$505,000) related to the construction of the junior school in the city of Toyonaka.

Moritomo Gakuen gave up on opening the school following the scandal and Yasuhiro Kagoike stepped down as head of the school operator in March.

The former company chief also faces another criminal complaint filed in May that he swindled around 62 million yen in subsidies between fiscal 2011 and 2016 from Osaka Prefecture for a kindergarten in the city of Osaka. In June, the prosecutors raided sites linked with the school operator.

In applying for state subsidies for the junior school construction, Moritomo Gakuen submitted a document showing building costs totalled around 2.38 billion yen. But it is suspected costs were padded to obtain increased subsidies, investigative sources said.

The office intends to build cases over the two allegations, believing that Yasuhiro Kagoike initiated the actions, according to the sources.

Regarding the controversial land deal, Moritomo Gakuen was found to have acquired the 94,399 sq ft plot in June last year for 134 million yen, roughly 14 per cent of its appraised value, following negotiations with the Finance Ministry’s local bureau.

Abe’s wife resigned from her post after the controversial land deal was revealed, but the possibility that she and the prime minister were connected with the deal recently came under parliamentary scrutiny. Abe has denied he or his wife played any role in it.