• Kyodo

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Police on Thursday arrested Arifumi Himeno, who hours earlier quit as president of Sasebo Heavy Industries Co., over allegations the company fraudulently obtained government subsidies, according to police sources.

Himeno, 63, was arrested with six other Sasebo Heavy executives, including Yukio Mizuhiro, 53, a former deputy chief of the firm’s shipbuilding plant in Sasebo, Nagasaki Prefecture.

Himeno’s arrest came just hours after he apologized over the scandal at the firm’s annual shareholders’ meeting. His resignation as president was officially approved at the meeting.

“I deeply apologize to the shareholders for causing such serious trouble,” Himeno read aloud from a prepared text.

He said he could not comment on the scandal “because the matter is being investigated by authorities.”

No questions were posed from the floor and the meeting ended after 30 minutes. Himeno refused to answer questions from reporters as he left the venue.

Sasebo Heavy is suspected of receiving 377 million yen in government subsidies in 2000 and 2001 by falsely stating it offered job retraining for its employees.

The subsidy program is intended to assist companies trying to improve their workers’ expertise through job training.

There is also speculation that the firm pocketed 45 million yen in subsidies for the transfer of 21 older workers it falsely said were sent to subcontractors.

In March, the Nagasaki Prefectural Police searched 17 locations in Sasebo, including the firm’s shipyard and Himeno’s residence.

According to the sources, Mizuhiro, who had earlier been informally questioned by police, has admitted that the company’s top executives were involved in the fraud schemes.

In a news conference in March following revelations of the subsidy scam, Himeno denied any involvement.

The scandal broke when a local piping company, a subcontractor to Sasebo Heavy, filed a damages suit over a separate subsidy program. The Nagasaki Prefectural Government then filed a criminal complaint against Sasebo Heavy, alleging fraud.

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