National

Snow Foods execs cleared of fraud

Pair linked to misused subsidies scam out of revenge

Kyodo

The Kobe District Court on Tuesday acquitted two former executives of now-defunct Snow Brand Foods Co. of defrauding the government of subsidies earmarked for the beef industry after the mad cow disease outbreak in 2001.

Prosecutors had demanded a three-year prison term for former executive managing director Hiromi Sakurada, 63, and 30 months’ imprisonment for managing director Masami Inoue, 62, on charges of abusing the government’s beef buyback program and defrauding the state of some 200 million yen by claiming imported beef was domestic.

The program was introduced to deal with a growing inventory of unsold domestic beef in the wake of the discovery of Japan’s first cow infected with bovine spongiform encephalopathy in September 2001.

In acquitting the pair, presiding Judge Kenji Sugimori said statements implicating the executives that were given by five company officials who were actually involved in the swindle were weak in terms of reliability.

The court “cannot recognize that there was any conspiracy between the five and the managing directors,” he concluded.

The five, who include a former section chief, were convicted of fraud and handed two-year suspended prison terms in November 2002. They had all pleaded guilty, and their sentences were suspended for five years.

The judge went on to say that the five others did not like the two defendants, and that “it is highly likely that they made statements fingering the two in the crime out of a desire for revenge” as they had been punished by the firm over the fiasco.

He also said the defendants had seen the severity of the public backlash over corporate misconduct, having witnessed the mass food-poisoning scandal at its parent firm, Snow Brand Milk Products.

Judge Sugimori said, “It is difficult to imagine that they would consent to the mislabeling.”

The Kobe District Public Prosecutor’s Office said it plans to appeal the ruling to the Osaka High Court and would hold discussions with relevant parties.

Throughout their trial, Sakurada and Inoue had maintained their innocence, claiming they were never informed of the wrongdoing involving their subordinates.

It is the first ruling in a series of fraud cases in connection with the beef buyback program in which the defendants were acquitted.

The pair issued statements through their lawyers that they were thankful for the acquittal and grateful to those who had offered support.

But former Snow Brand Food employees who lost their jobs due to the scandal expressed surprise.

Futami Kawase, 61, said subordinates cannot act without instructions from their superiors, while Muneo Yoshimura, secretary general of the firm’s labor union, said the responsibility of executives in forcing 2,000 people out of work is grave.

Prosecutors had alleged that the pair conspired with the other five to pass off some 30 tons of imported beef as domestic between October and November 2001 so that the firm could sell it to the government and reduce its stockpile of meat.

The meat was mixed with domestic beef and sold to an industry body that was in charge of making the purchases under the subsidy program.

Snow Brand Foods was disbanded in April the following year, some three months after the fraud came to light, drawing sharp public criticism.

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