The former president of the Hiroshima branch of Sogo Department Store was arrested Tuesday on suspicion of causing 320 million yen in losses by ordering the store to buy out-of-style women's clothes.
The clothing was purchased from a Tokyo-based company that Yoshimi Waseda, 74, the Hiroshima outlet president, also presided over as president.
The losses allegedly came between the end of 1996 and mid-2000.
Sogo's Hiroshima outlet established the Tokyo garment company in 1991 and held a 70 percent stake in it. The company filed for voluntary bankruptcy with the Hiroshima District Court in August 2000, citing total liabilities of about 5 billion yen.
Waseda assumed the presidency of the Hiroshima outlet in May 2000 but was removed from the position four months later to take responsibility for mismanagement.
He is suspected of aggravated breach of trust.