The Hiroshima High Court on Tuesday ordered a former mayor of Shimonoseki, Yamaguchi Prefecture, to return 341 million yen to the city for granting subsidies in 1994 to a failed city-funded express ferry linking Shimonoseki and Pusan, South Korea.
Presiding Judge Toshiaki Kawanami upheld a lower court ruling ordering former Shimonoseki Mayor Hiroshi Kameda to compensate the city. Kawanami, however, lowered the amount to 341 million yen from 845 million yen, which was roughly the amount of subsidies he granted.
The Yamaguchi District Court ruled in June 1998 that Kameda had illegally paid the subsidies to the ferry business, which was established in 1990 with funding from the city and the private sector. The ferry began operating in July 1991 but stopped in December 1992 before going bankrupt in April 1996.
The lower court said the subsidy payments could not be judged as beneficial for residents because there was no possibility that the operations would resume.
The city paid 465 million yen in subsidies to the ferry operator in April 1994 so it could end its contract with an Osaka-based company from which it was leasing the ferries, and a further 380 million yen the following month so the company could repay loans from financial institutions. Both payments were approved by the city assembly.
The focus of both the district court and high court rulings was on the public benefit of the subsidy payments.
The former mayor had maintained that there was public benefit and also noted that the payments had assembly approval.