Daio Paper Corp. will build a disposable diaper plant in Fujinomiya, Shizuoka Prefecture, in a move expected to escalate the feud between the papermaker’s management and its founding family, sources said Friday.
The construction plan is seen as management’s attempt to distance itself from the influence of the founding family, which wants to hold sway in running the corporate group amid the scandal over massive illicit loans taken out by former Daio Chairman Mototaka Ikawa, they said.
Ikawa, the grandson of Daio founder Isekichi Ikawa, has been indicted for breach of trust over his borrowing from the group companies totaling ¥5.5 billion, which he allegedly used for gambling.
Despite the scandal, which led to a major boardroom reshuffle, the family struck back, recently replacing all board members of group firm Elleair Paper Tech Co., a diaper producer based in Tochigi Prefecture where the family has a controlling stake, with hand-picked executives.
Elleair Paper already owns a paper diaper plant in Fujinomiya.
Daio management denied any link between its plan to build the new diaper plant and the feud.
“We have been considering enhancing production for a long time, and it has nothing to do with the problems with the founding family,” a Daio official was quoted as saying by one of the sources.
It has yet to be decided when the new plant will start operations, or how much will be spent on it, according to the sources.