• Kyodo

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Prosecutors sought a two-year prison term Friday for a former executive of defunct Snow Brand Foods Co. accused of defrauding an industry body out of 196 million yen by falsely labeling beef to receive subsidies under a government buyback program.

Tetsuaki Sugawara, 47, former head of the company’s Kansai Meat Center in Hyogo Prefecture, is on trial before the Kobe District Court. He is the first former executive facing a prison term over the Snow Brand Foods scandal.

According to the prosecution, Sugawara, in a conspiracy with Hiromi Sakurada, 61, former managing director of the company, and Shigeru Hatakeyama, 56, former head of the company’s meat sales and procurement division, falsely labeled 30 tons of imported beef as domestic in October and November and swindled the industry body out of 196 million yen under the buyback program in January.

The industry body, the Japan Ham & Sausage Processors Cooperative Association, purchased 280 tons of beef from Snow Brand Foods, including the 30 tons of falsely labeled beef.

The three were fired in March from the company, a subsidiary of Snow Brand Milk Products Co., after the scandal broke.

The buyback program was introduced following the discovery of mad cow disease in domestic cattle last September.

Various private industry bodies were in charge of buying beef on behalf of the government, which paid them subsidies.

Prosecutors said in their opening statement that Snow Brand Foods was hard-pressed to dispose of a large amount of beef it had in storage, after imported beef sales plunged following the outbreak of mad cow disease.

Sugawara allegedly ordered his subordinates to repack 13.8 tons of Australian beef in packages labeled as domestic beef at a warehouse in Nishinomiya, Hyogo Prefecture, and other locations, telling them he would take responsibility for the action.

Five executives, including Sugawara and Hatakeyama, who has been charged as an accessory in the fraud, have admitted to the charges.

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