Kimura exec who cooked the books can walk

by Jun Hongo

The Tokyo District Court sentenced former Kimura Construction Co. executive Akira Shinozuka to a suspended one-year prison term Wednesday for window-dressing the firm’s 2004 financial statements.

The head of the Tokyo branch of the now-defunct contractor was found guilty of falsifying the balance sheet to show the builder had a net worth of 400 million yen while its liabilities actually exceeded its assets by 1.3 billion yen. Financial soundness is a key requirement for renewing a contractor’s business license.

Shinozuka is the second key figure linked to the shoddy building fiasco to receive a verdict. Togo Fujita, former president of eHomes Inc., was handed a suspended 18-month prison term in October for falsifying documents to inflate the value of his firm to get licensed as a building inspector.

Shinozuka’s guilty verdict also came a day after prosecutors asked for a five-year prison term for disgraced architect Hidetsugu Aneha, the central figure in the building safety fraud, who is standing trial on various charges, including falsification of building quake-resistance data.

The court noted that Shinozuka’s window-dressing had no connection with the quake-resistance data fabrication.

The window-dressing by Shinozuka, whose sentence was suspended for three years, was deliberate, habitual and “significantly vicious,” presiding Judge Ikuro Toishi said.

Kimura Construction turned in the forged financial statements to the Kyushu development bureau of the Land, Infrastructure and Transport Ministry in September 2004 in order to have its business license renewed, the court said.

Under the construction industry law, contractors engaged in building structures costing more than 45 million yen must renew their license every five years by submitting financial reports that prove they are not operating at a loss.

Judge Toishi ruled that contrary to Shinozuka’s claims, he was well aware of the window-dressing and played a key role in the misdeed.

Shinozuka, 46, called the verdict “not acceptable” during a news conference afterward but made no mention of whether he would appeal and thus prolong the trial.

The book-cooking came to light when the building safety scandal broke last November.

Kimura came under scrutiny by prosecutors for its link with Aneha and the architect’s fabricated quake-resistance data, when it was revealed that the constructor employed him as their designer and reportedly earned about 23 billion yen over six years from 1999. After the scandal broke, the firm folded.

The proceeds accounted for more than a third of the 63 billion yen the firm earned in the period.

The land ministry also revealed that Kimura Construction built 56 of the 99 buildings based on Aneha’s bogus data.

Prosecutors seized Kimura Construction’s books during a search last December, leading to Shinozuka’s arrest in April.

Although the charges against Shinozuka were not directly related to the building strength data fabrication, prosecutors demanded an 18-month sentence because he was deeply involved in the window-dressing.

Prosecutors also alleged that Shinozuka colluded with Kimura Construction President Moriyoshi Kimura and began falsifying financial documents as early as 1997, and their excessive effort to cut down costs caused the Aneha scam to snowball.

Shinozuka, released in August on 3.5 million yen bail, maintained his innocence throughout his trial, claiming the window-dressing was done solely by the president.

His lawyers had also questioned the arrest, saying Shinozuka was unfamiliar with standards required by the land ministry to renew a business license and therefore was oblivious to the misdeeds.

However, Moriyoshi Kimura, also on trial for window-dressing the company’s statements, stated that the head of the Tokyo branch was well aware of the sham financial reports.

“He knew of the window-dressing by 2002 at the latest,” Kimura testified as a witness in September.

Kimura Construction, based in Yatsushiro, Kumamoto Prefecture, filed for bankruptcy in December.