Tax authorities have determined that a scheme promoted by an affiliate of Nomura Securities Co. for investment in an aircraft-leasing business was used by some 70 wealthy individual investors to evade taxes, sources said Tuesday.
The authorities have ordered 21 investors living in the Kanto region to pay a combined 1 billion yen in taxes and penalties, the sources said.
The 21, who invested in the scheme run by Tokyo-based Nomura Babcock and Brown Co., failed to report around 2.8 billion yen in income, the sources said.
The roughly 70 investors nationwide include well-known economic commentators, as well as former executives of the collapsed pest-control firm Cats Inc., who have been arrested for alleged stock-price manipulation, the sources said.
According to the sources, Nomura Babcock and Brown solicited investments in the plane-leasing operation from around 1997 from some 100 people.
The investors formed a union, with each putting up between 50 million yen and 100 million yen.
Using the funds from the union as well as loans from financial institutions, the union purchased aircraft and leased them to a British airline.
During the first few years, the depreciation of the aircraft exceeded the leasing fees, leading to losses, and the investors reported their income after deducting the losses.
Upon investigation, tax authorities concluded that the main purpose of the investment was to avoid taxes, the sources said.
They found that Nomura Babcock and Brown had been in charge of deciding crucial matters, including which firm to lease the aircraft to, and they found no evidence the investors had actually been involved in running the union.