The arrest of the former chief of Moritomo Gakuen over suspected fraud in the receipt of government subsidies should not detract attention from the questions regarding the sale of a government-owned tract of land to the Osaka-based school operator at a steep discount. This land sale is at the core of the suspicions surrounding the operator, which boasted of its close ties to Prime Minister Shinzo Abe’s wife. The government has so far failed to give a convincing account of its discount sale of the plot in Toyonaka, Osaka Prefecture, for the construction of an elementary school — for which Akie Abe had until recently served as honorary principal. Prosecutors should act on a criminal complaint filed over the land transaction and investigate unanswered questions over the deal.

Yasunori Kagoike and his wife Junko were arrested Monday for allegedly defrauding the national government of some ¥56 million in subsidies provided for building the elementary school by inflating its construction cost in contract documents submitted to a land ministry-linked entity last year. Moritomo Gakuen gave up on completing construction of the school, which was scheduled to open in April this year, after final approval by local education authorities was thrown in doubt, and returned the subsidies it had received.

Moritomo Gakuen, which was known for the nationalistic education given at a kindergarten it runs — including having children recite the prewar Imperial Rescript of Education — came under public scrutiny following revelations in February that it had bought the 8,770-sq.-meter plot in Toyonaka in 2016 for ¥134 million, a mere 14 percent of its appraisal value. Political influence was suspected because Akie Abe was listed as honorary principal of the school to be built at the site. Moritomo Gakuen had initially planned to name the school after the prime minister, and had children at its kindergarten cheer for Abe at a sports event. Suspicions over the land deal became politically charged after Abe told the Diet that he would resign as both prime minister and lawmaker if either he, his wife or his office was found to have been involved in the land sale.

At least Kagoike appears to have been well aware of the value of his links to the prime minister’s wife. In the negotiations with the Finance Ministry to first rent and then buy the plot under favorable terms, Kagoike is said to have emphasized the position that Akie Abe held at the planned school, and informed her of the talks’ process. He also relayed his wishes on the land transactions to the Finance Ministry via a government official assigned to the prime minister’s wife, who in turn faxed a response by a senior ministry official to Kagoike.

It was after these exchanges took place that Kagoike was granted a contract to buy the land at the steep discount in April 2016, in which the ministry deducted ¥800 million from the plot’s value as an expense to cover the disposal of industrial waste found buried at the site. Summoned to a grilling by the Diet as a sworn witness, Kagoike said he thought “divine wind” had aided the deal. Questions have been raised about the estimate of the cost of disposing of the waste, and suspicions persist that the Finance Ministry officials took into consideration the presence of Akie Abe on Moritomo’s side and offered favorable terms to the school operator.

The Finance Ministry has denied these charges and insists that the discount sale of the land was legitimate. However, it has refused to provide further explanations, saying that the records of encounters and negotiations with Moritomo Gakuen over the land deal had been destroyed in accordance with in-house rules. It also has rejected opposition demands for an additional inquiry in the deal. Akie Abe has meanwhile stayed silent about the case, except to post a message on Facebook denying that she handed Kagoike a ¥1 million donation “from Shinzo Abe” in September 2015, which Kagoike alleged she did when he spoke under oath in the Diet. The Abe administration and the ruling coalition have rebuffed opposition demands to call Akie Abe before the Diet to give sworn testimony and clear up the discrepancy with Kagoike’s account.

The special investigation squad of the Osaka District Public Prosecutor’s Office, which interrogated and arrested the Kagoikes, has received a criminal complaint filed by a group of some 240 lawyers and researchers against officials of the Finance Ministry’s local bureau that they engaged in a breach of trust by selling the Toyonaka land plot at an unfair discount, thereby causing damage to state coffers. The prosecutors should take the complaint seriously and refrain from using their arrest of the Kagoikes as an excuse for not acting on the land deal probe.

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