• Kyodo

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Koji Chiba, the former chairman of Duskin Co. who was arrested this week over the shady use of company funds, made 1.3 billion yen by selling most of his unlisted Duskin shares after the firm’s food franchise was hit last year by scandal, sources alleged Friday.

Chiba, 63, allegedly began unloading his Duskin shares last July — two months after the Duskin-owned Mister Donut chain was found to have sold dumplings imported from China that contained a banned additive. He completed his share selloff in March.

Shuichi Shibahara, 62, a former Duskin senior managing director who was arrested along with Chiba, also sold most of his Duskin stock between April 2001 and last October, netting 210 million yen, the sources said.

The Tokyo Public Prosecutor’s Office arrested Chiba and Shibahara on Wednesday on suspicion of fabricating 180 million yen worth of company contracts to finance a failing design firm operated by one of Chiba’s friends.

Duskin, a major privately held cleaning equipment rental company based in Suita, Osaka Prefecture, was also found to have provided 5 million yen to a struggling business partner in 1998 through a company slush fund.

According to the sources, Chiba and Shibahara sold their stocks just as Duskin was pushing to go public.

The stocks unloaded by Chiba and Shibahara fetched 8,850 yen per share, the same price that was quoted before the additives scandal broke. The sources said the stocks were apparently sold mostly to Duskin employees and business partners aware of the firm’s listing plans.

Chiba sold 145,000 shares, including those held by relatives, leaving him with just 2,000. Shibahara sold 24,000 shares and now has only several hundred, the sources said.

After the two completed their share sales, Duskin announced the firm would no longer refer stock buyers on grounds that it would aim to go public, effectively making it difficult to trade Duskin shares.

The doughnut chain sold the problematic meat dumplings in December 2000. Shibahara apparently knew of the illegal additive in late November 2000 and Chiba sometime in February 2001. The two did not disclose the information until the scandal broke in May 2002.

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