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Two people, including a former employee of NTT Communications Corp., were arrested Wednesday for allegedly defrauding the firm out of some 200 million yen by padding payments for electronic devices, Tokyo police said.

The suspects were identified as former NTT Communications solutions business section employee Yoshinori Kawamura, 37, and Takayuki Chujo, 33, the president of the system development firm the equipment was purchased from in 1998.

NTT Communications is a core unit of the Nippon Telegraph and Telephone group and covers long-distance calls and computer-related services.

According to police, the pair had the computer system supplier and NTT Communications sign a procurement contract for electronic devices in September 1998. Chujo was able to procure the devices from a subcontractor for some 100 million yen but padded the bill to 200 million yen, they alleged.

Both suspects have admitted to the allegations, according to police.

The case came to light after the Tokyo regional tax bureau last year pointed out that some 550 million yen had not been declared to tax authorities. The tax agency then levied back taxes on some 80 million yen of the amount, saying the company intentionally hid that money to evade paying taxes.

NTT Communications set up an in-house investigation team and discovered that the firm had paid Chujo’s firm in excess of some 150 million yen through four contracts between fall 1998 and 2000, according to a company spokesman. In March this year, Kawamura and two of his subordinates at the time were fired for allegedly taking part in the swindle.

“We are the victim, and we filed a complaint with police . . . as a fraud by the former employees,” the company said in a written statement released Wednesday. The spokesman said that the complaint was filed Monday.

NTT Communications claimed the case was a crime committed by the three as individuals and was not systematically plotted by the company.

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