The Yomiuri Shimbun
A certified public accountant used part of the money he is alleged to have swindled the former Goodwill Group Inc. (GWG) out of to buy another company, helping a then secretary of former Liberal Democratic Party Secretary General Hidenao Nakagawa profit from his investment in the company, The Yomiuri Shimbun has found.
The cell phone research company, Mobile Judge, based in Minato Ward, Tokyo, was acquired at an unusually high price by the accountant, helping Nakagawa's former secretary, who sold his shares in the Tokyo company, to make a profit of 6.6 million yen.
A source close to the accountant told The Yomiuri Shimbun that the accountant and others believed it would help to have a connection with the former LDP secretary general.
In the previously reported fraud case, the 51-year-old accountant allegedly siphoned off about 18 billion yen from a total of 88.3 billion yen GWG paid the Corinthian Fund for a temporary staff agency in October 2006.
The accountant later set up the GW Fund using part of the 18 billion yen he took from the deal.
In July 2007, the accountant bought 301 shares in Mobile Judge using the new fund. He bought the shares at 600,000 yen each from seven individual stakeholders in the business at a total cost of 180.6 million yen, giving him a shareholding of 50.1 percent.
Mobile Judge had been set up in February that year with investment including that of Nakagawa's then secondary secretary.
When the firm was established, the government-paid secretary obtained 24 shares in it at 50,000 yen per share. He later earned a profit of 6.6 million yen by selling 12 of the shares at a time when the corporate value of the company had risen 12 times despite sales of only 1.26 million yen and a registered ordinary loss of 31.18 million yen.
The accountant claims he decided to acquire Mobile Judge despite the high price after hearing from the Tokyo company that it had unofficially been awarded business contracts under the government's Information Grand Voyage project.
However, a source close to the accountant admitted that helping the then secretary and other investors make a profit was one of the purposes of the corporate acquisition.
"If we can make a connection with a powerful politician's secretary by buying [the company], this will give us peace of mind should one of the companies we invest in get into trouble."
The Grand Voyage project was launched by the Economy, Trade and Industry Ministry to revitalize the nation's information technology industry by assisting development of information search and analysis technology.
About three weeks after Mobile Judge approached the GW Fund asking it to acquire it, the company officially received an order for about 100 million yen to test an online poll system.
After this order, however, the company started to struggle.
In July last year, the accountant did a share swap of Mobile Judge's shares for those of another IT company. But this deal resulted in losses for both the accountant and other investors, because the IT firm went bankrupt about a month later. Mobile Judge itself also went out of business in November.
The secretary resigned as a government-paid secretary in February last year, and quit Nakagawa's office last month.
In a recent interview with The Yomiuri Shimbun, the former secretary said, "On a friend's recommendation, I bought the shares in Mobile Judge for investment purposes."
He added: "All I was told was that the company was working on projects with a promising future and that I'd be able to sell the company's shares at a high price. I don't even know which company [Mobile Judge] was sold to."
Nakagawa's office told The Yomiuri Shimbun: "These are just the personal dealings of a former secretary. But it's extremely regrettable that they have caused [public] misunderstanding."
(Feb. 1, 2009)
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