Three arrested over union affiliate scam

The Japan Times, 11 October 2001

Tokyo prosecutors arrested three men Wednesday, including the 59-year-old managing director of a firm affiliated with the nation's largest labor union, on suspicion of embezzling 38 million yen from the company.

The arrests came as special investigators from the Tokyo District Public Prosecutor's Office raided the Tokyo office of UBC, a company with ties to the All Japan Prefectural and Municipal Workers' Union (Jichiro), the same day.

Investigators suspect the money was paid to gangsters who were to stop parties close to UBC from making public accounting irregularities at the firm.

Arrested were UBC's managing director, Yoko Hasegawa, who also serves as a special member of the union's executive committee; Hideyo Saito, 49, a senior official of the firm's operations coordination section; and consultant Shunji Nakayoshi, 56.

According to sources close to the case, the incident can be traced back to the tens of millions of yen in losses incurred from stock transactions undertaken by Hasegawa and other senior UBC officials with company money during the bubble economy years of the late 1980s. Irregular accounting methods were allegedly used to keep the losses from appearing on UBC's books.

However, the fictitious book-keeping enabled those involved to secure more money than the initial losses, leaving them with extra money, which they divided up among themselves, the sources said.

Around 1997, however, disputes arose over the way the money was being split, with one of the men threatening to go public with the case, according to the sources.

To prevent this from happening, Hasegawa and the others used similar accounting tactics to secure 30 million yen, which was used to pay off gangsters to pressure their disgruntled colleague to remain quiet.

UBC's predecessor was established in 1983 to develop information processing systems for Jichiro member unions and the union's mutual aid organization. Its name officially became UBC in 1993.

Jichiro and its member unions put up its startup capital, and the chairman of Jichiro has traditionally served as UBC's president.

Former UBC officials have already filed a criminal complaint against Hasegawa on suspicion of embezzlement for allegedly withdrawing 50 million yen from the firm's bank account in 1998. The money was used to deal with rightist groups that were threatening to disrupt Jichiro gatherings and hound the union with loudspeaker vans over a case of suspected insurance fraud by a former vice chairman of the Osaka Prefectural Workers' Union.

Jichiro, whose headquarters are in Chiyoda Ward, Tokyo, consists of roughly 3,100 prefectural and municipal worker unions and has over 1 million members nationwide. It is a pivotal member of the Japan Trade Union Confederation (Rengo).

The union has already been accused of skimming some 200 million yen of roughly 300 million yen in commissions it received over several years up to 1999 from a life insurance firm via a dummy agency.

Jichiro officials, who expressed shock at Wednesday's arrests, were especially concerned by the allegations that Hasegawa has links with organized crime.

A senior Rengo official said that while the trade union confederation was not directly linked with the scandal, it may be adversely affected as Jichiro has been a main supporter of Rengo labor movements.