Chiba Gov. Akiko Domoto on Thursday ordered prefectural auditors to inspect a local housing corporation that is on the brink of insolvency due to its inability to repay debts of more than 90 billion yen.
With Chiba Prefecture having invested in the corporation, this scenario reflects a deteriorating situation in terms of the management of local housing corporations nationwide.
The liabilities of one Hokkaido housing corporation, for example, exceed its assets by about 65 billion yen.
It is rare for a governor to directly demand this kind of inspection.
"If there are negative rumors (about land purchases), the residents will not be convinced to support the corporation," Domoto said.
The governor is looking to determine whether there have been any irregularities in dealings and decisions undertaken by the corporation and the prefecture in relation to land purchases.
A private auditing firm issued a report in October stating that the housing corporation had incurred 10.8 billion yen in liabilities exceeding its assets.
The auditors inspected a combined tract of 75.2 hectares of land in the city of Ichihara that the corporation bought between July 1995 and January 1998.
The corporation purchased the land for about 15.9 billion yen; it had planned to sell 1,600 built-for-sale houses. Due to the recession, however, it abandoned its plan to develop the complex.
The corporation currently owes 91 billion yen to its creditors. One of its creditor banks is negotiating an indemnity agreement with the prefectural government concerning 19 billion yen that is due by the end of this month.
