OSAKA – The former head of a school operator and his wife, who are at the heart of a cronyism scandal linked to Prime Minister Shinzo Abe, pleaded not guilty Wednesday to charges of fraud related to public subsidies for their schools, claiming their arrests were politically motivated.
Yasunori Kagoike, the 66-year-old former chief of Moritomo Gakuen, and his 62-year-old wife Junko have been charged with defrauding the central government of roughly ¥56 million ($500,000) in subsidies between March 2016 and February 2017, by alleged padding of construction costs for an elementary school in Osaka Prefecture on land purchased from the government.
The two were also indicted for allegedly reporting an incorrect number of teachers at their preschool, to unlawfully receive a total of around ¥120 million in subsidies from the prefecture and the city of Osaka between fiscal 2011 and fiscal 2016.
“I will not tolerate a politically motivated investigation (or) politically motivated arrests,” Kagoike said during the couple’s first hearing at the Osaka District Court.
They were arrested in July 2017 after it was revealed that Moritomo Gakuen had purchased the land in Toyonaka the previous year for ¥134 million despite it being valued at ¥956 million.
The heavily discounted sale sparked favoritism allegations against Abe, as his wife Akie had been named honorary principal of the elementary school. She stepped down from the post in the wake of the scandal.
Kagoike claimed he had received special treatment in the land deal with the Finance Ministry as he was an acquaintance of the prime minister and his wife. Meanwhile, government officials have insisted that the discount was given to cover the cost of removing underground waste at the site.
Kagoike and his wife were detained for some 10 months before being released on bail last May.
The ministry has punished 20 officials, including Nobuhisa Sagawa, former head of the National Tax Agency, over falsifying and destroying documents related to the land deal. But prosecutors have not indicted any officials over the matter.
Abe has told the Diet that neither he nor his wife was involved in the land sale, and that he would resign if evidence to the contrary is found.