OSAKA – Prosecutors on Wednesday sought a seven-year prison term for the former head of a school operator and his wife at the heart of a cronyism scandal linked to Prime Minister Shinzo Abe, in relation to fraud valued at over ¥170 million ($1.6 million) involving public subsidies for their schools.
Yasunori Kagoike, the 66-year-old former chief of Moritomo Gakuen, and his 62-year-old wife Junko, are charged with defrauding the central government of roughly ¥56.4 million in subsidies between March 2016 and February 2017 by overcharging costs for constructing an elementary school in Osaka Prefecture on land purchased from the government, according to the indictment.
The prosecutors allege that they planned the fraud and instructed the company building the elementary school, which applied for state subsidies on their behalf, to defraud the state.
In the trial at the Osaka District Court, the prosecutors said the pair intended to exploit the subsidies to get money for the school’s operation.
The defendants denied most of the allegations at a hearing in March, saying they did not conspire to or deliberately exploit subsidies.
They were also indicted for unlawfully receiving a total of around ¥120 million in subsidies from the prefecture and the city of Osaka between fiscal 2011 and fiscal 2016 by reporting a false number of teachers at their preschool.
The two were arrested in July 2017 after it was revealed that Moritomo Gakuen had purchased 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.