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Tokyo prosecutors may soon file another charge against a former chairman of Mizutani Kensetsu Co. for suspected corporate tax evasion in the business year to August 2004, investigative sources said.

Isao Mizutani, 61, was arrested earlier this month on suspicion he had a key role in the engineering firm’s alleged evasion of corporate taxes in the year to August 2003.

Before the fresh charge is leveled against Mizutani, a special squad from the Tokyo District Public Prosecutor’s Office will likely indict Shigeyuki Nakamura, 55, a representative director, and Obi Kensetsu K.K. President Fumio Obi, 58, on Friday when their detention period ends.

Mizutani, whose detention ends Aug. 2, will likely to be indicted the same day.

Mizutani Kensetsu is suspected of dodging taxes for the 2003 business year by booking a bogus loss of 550 million yen related to a land transaction in Kuwana, Mie Prefecture, and disguising 1.8 billion yen worth of nonperforming loans, the sources said.

When arresting Mizutani, prosecutors charged him with hiding 760 million yen of the firm’s income in fiscal 2002 by booking a bogus loss related to a land transaction in Iwaki, Fukushima Prefecture, and hiding uncollectible loans.

Mizutani has been charged with evading 230 million yen in taxes so far, but prosecutors probably will raise that amount if they indict him.

For the 2002 and 2003 business years combined, Mizutani is believed to have evaded about 2 billion yen in taxes. The company also paid 1 billion yen to a clothing company run by Fukushima Gov. Eisaku Sato’s brother after buying its land, and sent 100 million yen to a separate firm that he ran.

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