Duskin Co., a major cleaning equipment rental firm under investigation for a series of questionable transactions, provided 5 million yen to a struggling business partner in 1998 through a company slush fund, sources familiar with the case said Thursday.
Former Duskin chairman Koji Chiba, 63, and another former Duskin executive were arrested on Wednesday on suspicion of fabricating 180 million yen worth of company contracts to finance a struggling design firm run by Chiba's friend.
The latest allegation is the first involving a slush fund, adding a new dimension to the money scandal Tokyo public prosecutors are trying to unravel.
Sources familiar with the case said Duskin, based in Suita, Osaka Prefecture, created the slush fund by padding invoices for printing paper used by the Duskin-owned Mister Donut chain and other group business operations.
The sources said Duskin started padding the printing bills around January 1998 and it was from this slush fund that Duskin gave 5 million yen to an Osaka-based electric appliances wholesaler that operates a Mister Donut franchise. The payment was allegedly made in April and October that year.
According to a credit-rating company, the Osaka wholesaler, a company with several billion yen in annual sales, had been operating profitably until the business year through March 1998. The firm also reported a loss the following year despite receiving funds from Duskin.