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Tokyo prosecutors arrested senior executives of a Tokyo real estate agency Thursday after raiding its offices over allegations that the firm failed to pay 500 million yen in taxes during a three-year period, sources close to the investigation said.

According to the sources, Kazuo Shinbata, 46, the president of Shin-ai Corp., and other senior executives of the company were ordered by prosecutors to present themselves for questioning Thursday morning. They were arrested in the afternoon.

The company, which mainly sells condominiums in the greater metropolitan area, is suspected of falsifying its financial statements to make it seem as if it had paid out nonexistent “sales staff pay” to its employees. The firm was inspected by Tokyo tax authorities in September 1997. Tax regulators also took part in Thursday’s raids.

According to sources close to Shin-ai, Shinbata and other senior officials instructed bookkeeping staff to concoct financial statements that would make it seem that 69 employees were paid an additional sum apart from their regular salaries.

From the period spanning August 1994 to July 1997, the firm effectively failed to report about 1.1 billion yen in income and thus did not pay roughly 500 million yen in corporate income taxes as a result, they added.

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