The former vice president of lactic drink maker Yakult Honsha Co., arrested on suspicion of tax evasion, had some 140 million yen hidden in a bank account in Singapore as of the end of September, sources revealed. Last spring, Naoki Kumagai, 69, was ordered by tax authorities to pay about 100 million yen for failing to pay taxes on the roughly 160 million yen in profits he had made in trading bond futures in 1993. However, he said he could not pay the money even though the Singapore bank account existed, the sources said Sunday. Kumagai was arrested for failing to declare as income the roughly 530 million yen in rebates he received from the Tokyo branch of Cresvale International Inc., the securities arm of Princeton Economics International, for getting Yakult to purchase PEI's privately placed bonds. Some 70 Japanese firms bought the bonds and are suffering losses because the bonds are now worthless. Investigators are currently carrying out a fraud probe. Police looking into Kumagai's financial records discovered that he set up a paper company in the Cayman Islands, a tax haven, around 1992 for the purpose of managing his personal assets, sources said, noting that members of his family serve as senior officials of the firm. The Singapore account was made in this company's name, the sources said. Kumagai's money was invested in dollars and he was looking into investments by having a major U.S. investment bank manage his money through derivatives and foreign bonds, according to the sources. Much of the money he received from Cresvale's Tokyo branch was deposited at the Singapore account and all transactions required Kumagai's approval, they said. He used the money to pay off mortgages on his properties, they added.
