Japan Press Weekly

Tweet

2009 February 11 - 17 [SCANDAL]

Consultancy firm president and others involved in construction of major Canon plants arrested for avoiding taxes

In a tax evasion scandal over the construction of a Canon Inc. factory and other facilities in Oita Prefecture, seven people were arrested on February 10 by the Tokyo District Public Prosecutors’ Office on suspicion of violating the corporation tax law.

The seven includes the president of the Oita-based consultancy firm, Oga Norihisa. He allegedly conspired with six other people to evade taxes on his corporate group’s earnings using slush funds from the construction contracting company Kajima Corp.

Kajima was successfully awarded contracts for the construction projects for Canon and created the slush funds by padding the costs for the projects that were outsourced to subsidiaries. Kajima built five major plants for Canon between 2003 and 2005 in various cities, including Oita and Kawasaki.

In a bid to select construction firms that receive orders from Canon, Oga, the president of Oita-based consultant firm Daiko as well as Daiko-affiliated interior work firm Light Black, allegedly made use of his friendly relations with Canon Chairman Mitarai Fujio, who also heads the Japan Business Federation (Nippon Keidanren).

Light Black is suspected of failing to declare 976 million yen in income and in evading corporate taxes totaling 292 million yen in the two-year period through May 2006.

The amount of income concealed by Light Black and two other firms is estimated at 3.5 billion yen or more. The Daiko group is suspected of using the money to purchase stocks, mainly shares of Canon using Oga’s relatives’ names.

The Tokyo Prosecutors Office is expected to make a thorough investigation into the tax evasion case involving Canon projects.

Six other suspects include Nagata Sukekatsu, 80, former Oita Prefectural Assembly speaker.

In addition to the seven, Nanba Hideo, Naniwa Consultants International Co. president and four others were arrested on February 9, bringing the total number of the arrested to 12.

A Canon spokesman said that “it is very regrettable” that Oga, an old acquaintance of Canon Chairman Mitarai Fujio, has allegedly been involved in failing to declare his income. He added that a thorough internal investigation into this case by Canon shows that there have been no illegal transactions between Canon and Mr. Oga Hisanori or his companies.