• Compiled From Kyodo, Staff Reports

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Kooki Corp., a construction firm whose employees were allegedly involved in a mass orgy with prostitutes at a hotel in China last month, failed to report 200 million yen in taxable income over four years to last November, sources said Tuesday.

Tax authorities believe the money was used for staff entertainment.

The Osaka Regional Taxation Bureau has punished the Osaka Prefecture-based firm, slapping it with about 75 million yen in unpaid taxes and a penalty surcharge, the sources said, noting the contractor apparently paid up.

The firm used such means as hiding funds in off-the-book accounts, they said.

A company spokesman refused to comment on the alleged tax evasion.

Chinese media reported last month that a Japanese tour group, numbering over 300 men, from the firm invited about 500 hostesses and went “prostitute shopping” at the International Conference Center Hotel in Zhuhai, southern China, engaging in an orgy on Sept. 17.

Local police are investigating the incident, which outraged the Chinese public and the Chinese Foreign Ministry, given that the orgy took place on the eve of the anniversary of Japan’s 1931 invasion of China.

Kooki Corp. has denied involvement in “systematic prostitute-buying,” issuing a statement that the company-paid trip was “organized to commend employees as part of a company campaign.”

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