• Kyodo

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Former Kochi Vice Gov. Takashi Yamamoto was arrested Thursday afternoon on suspicion of loaning 1 billion yen in public money to an apparel makers’ cooperative despite knowing the loans would sour, police officials said.

The Kochi prefectural police also arrested Ryozo Kawamura, 60, a former chief of the Kochi Prefectural Government’s commerce, industry and labor department; Shohachi Miyaji, 60, a former deputy of the department; and Nagamasa Muraki, 48, incumbent assistant chief of the prefecture’s commerce and industry policy section.

The four face breach of trust charges.

The loans were granted to Mode Avance — an apparel manufacturers’ cooperative set up by five apparel makers in the city of Nankoku — without proper checks between September and December 1996 and have since become irrecoverable.

Although Yamamoto, 71, has argued the loans were part of the prefecture’s measures to protect local jobs, police say his claim is hard to believe because he and his accomplices had secretly created the loan scheme.

Criminal charges against Yamamoto would place enormous political pressure on Kochi Gov. Daijiro Hashimoto, who may have to take the blame for appointing Yamamoto as vice governor in 1992.

After the arrest of his former right-hand man, Hashimoto indicated to reporters that he may consider stepping down and then seeking the verdict of Kochi voters by bidding for re-election.

The governor also said he believed Yamamoto was not wrong in extending the loans in 1996.

Yamamoto served as vice governor from 1992 to 1998 under the popular journalist-turned-governor, who is the younger brother of former Prime Minister Ryutaro Hashimoto.

The governor has denied knowledge of the questionable loans, which have been under investigation by the Kochi Prefectural Assembly since March 2000.

Yamamoto is suspected of conspiring with Shigeru Yasuhara, head of Mode Avance, to provide operating funds to the union when he served as Kochi vice governor.

Yasuhara, 62, who was earlier indicted for defrauding Kochi Prefecture of 490 million yen, also faces imminent arrest over the 1 billion yen in questionable loans.

The lending system was allegedly created secretly by Yamamoto and his subordinates, including the former head of the commerce department, without informing Gov. Hashimoto or the prefectural assembly.

Yamamoto allegedly told the subordinates not to inform the assembly of the lending system, saying, “Telling the assembly would be tantamount to a public announcement.”

In addition to this sum, Yamamoto also allegedly authorized a 200 million yen loan to Mode Avance in December 1997. Kochi police plan to grill the suspects to determine whether they should be accused of breach of trust for the 200 million yen loan.

Prior to these loans, the prefecture had already lent the cooperative 1.44 billion yen for construction of factories. Most of the money is in default.

Police suspect Yamamoto and other officials lent operating funds to Mode Avance, fearing they would have to take the blame for the loans as well as legal responsibility if the cooperative went bankrupt.

At a hearing at the prefectural assembly investigation panel in November, Yamamoto testified that he authorized the loans “to safeguard employment,” believing the union might be able to rebuild its business.

Yasuhara was indicted for swindling from the prefecture 490 million yen of the 1.44 billion yen loan that was extended to Mode Avance.

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