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A government-affiliated agricultural body decided Tuesday to file for bankruptcy after allegedly misappropriating more than ¥600 million in capital funds, officials said.

The Japan Rural Information System Association was set up in 1975 to improve information infrastructure in rural farm areas by providing cable television and other communications tools.

The association has suffered net liabilities with its debt estimated at ¥1 billion, the officials said, adding it is impossible for the association to rebuild itself because it can’t find a way to raise funds to run the business.

The decision to declare bankruptcy was made by its executive board, they said.

The government-funded association has been jointly supervised by the Agriculture, Forestry and Fisheries Ministry, the Internal Affairs and Communications Ministry, and the Ministry of Economy, Trade and Industry. Its executives include former officials of the agriculture ministry and METI.

The three ministries issued a business improvement order to the association in May last year, urging it to shed light on the alleged fund misappropriation and who is to blame for it.

The three ministries are considering filing a breach-of-trust accusation against the people responsible for the misappropriation, the sources said.

The association dipped into assets it had put up as capital and gave the money to a subcontracted entity where senior association officials concurrently serve as executives. The amount of funds tapped by the association totaled ¥646 million during a six-year period through fiscal 2008.

Critics say the question of who is to blame will become blurred if the association is to be liquidated during bankruptcy.

The failure is also expected to provoke further criticism of the notorious “amakudari” practice.

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