The Tokyo High Court on Thursday upheld the seven-year prison sentence imposed by a lower court on Hiroyasu Watanabe, former president of the now-defunct Tokyo Sagawa Kyubin Co., for aggravated breach of trust that caused the trucking company to suffer huge losses.

Watanabe, 66, was found guilty by the Tokyo District Court in March 1996 of causing the firm about 40.2 billion yen in losses through illicit dealings with an underworld organization and a number of influential politicians.

According to Thursday’s ruling, Watanabe provided loans and loan guarantees worth 15.7 billion yen from his company to two firms owned by Susumu Ishii, the late leader of the Inagawa-kai crime syndicate, in 1990, without securing collateral.

Watanabe granted the loans in reward for Ishii’s efforts to suppress the activities of a group that had been annoying an influential politician, the court said.

Although the court neither named the group nor the politicians, it is widely believed that the group was Nihon Kominto, a rightist organization that was waging a harassment campaign in 1987 against the late Prime Minister Noboru Takeshita, who formerly headed the Liberal Democratic Party’s faction now led by ex-Prime Minister Ryutaro Hashimoto.

Between 1989 and 1991, Watanabe also made Tokyo Sagawa grant 24.5 billion yen in loans and loan guarantees to the Heiwado real estate group and its then president, Yasuo Matsuzawa, with the intention that the money would be used as funds for his political lobbying activities, the court said.

In upholding the sentence, the presiding judge, Toshio Takagi, said the case involving Watanabe was far more serious than other crimes involving company executives in terms of its impact on society.

“Aside from its financial damage (to Sagawa), (Watanabe) shocked society by unveiling the cozy ties between the well-known trucking giant, the crime organization and politicians,” the judge said.

In the Tokyo Sagawa scandal, Watanabe and four others in the trucking firm were indicted for aggravated breach of trust amounting to 95.2 billion yen. Of the five, three have been tried and found guilty.

The scandal shocked the nation’s political circles at the time. The late Shin Kanemaru, a former LDP vice president who was regarded as the power behind the prime minister, was fined for receiving 500 million yen from the trucking firm. Former Niigata Gov. Kiyoshi Kaneko was found guilty of violating the Political Funds Control Law by failing to report money he received from Sagawa.

In a civil suit filed by Sagawa Kyubin Corp., which merged with Tokyo Sagawa after the scandal, the Tokyo High Court ordered Watanabe to pay about 4 billion yen to the firm in 1997.

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