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Editorial: Discounted sale of state-owned property core of Moritomo scandal

Yasunori Kagoike, former chairman of scandal-hit school operator Moritomo Gakuen, and his wife Junko were arrested on suspicion of fraud by a special investigation squad from the Osaka District Public Prosecutors Office on July 31. They are suspected of illicitly receiving subsidies for an elementary school that Moritomo Gakuen had planned to open by creating three separate contract documents with different costs for school construction and submitting the one with the highest price to the national government.

The allegation is about fraud involving public money. It is crucial for the investigative force to uncover the reasons why administrative bodies could not check the subsidy distribution process as well as how the funds were being used.

A Diet probe into the Moritomo Gakuen-related scandal began in February. The public prosecutors' special squad has been carrying out investigations into the case following complaints filed by the Osaka Municipal Government as well as a citizens' group comprised of lawyers and scholars from across Japan.

Amid such a development with the issue, the biggest question that remains unanswered is how a state-owned land lot in the Osaka Prefecture city of Toyonaka was sold to the school operator as the site of the planned elementary school at such a massively discounted price. This scandal has rocked national political affairs. Full efforts into an investigation should be made to get to the heart of the case.

The Finance Ministry's Kinki Local Finance Bureau sold the state-owned property to Moritomo Gakuen for roughly 134 million yen, after deducting some 800 million yen for waste removal fees from the appraised price. Negotiations over the sale of the land progressed according to the school operator's demands, with Kagoike saying in the Diet that there was "the work of a divine wind," in reference to how smooth the process went.

On the other hand, then Financial Bureau Director-General Nobuhisa Sagawa, who has been promoted to the head of the National Tax Agency, told the Diet that the bureau had scrapped records of negotiations between officials and Moritomo Gakuen after the contract for the sale was signed. Sagawa kept refusing to explain about the deal in detail, saying that no digital data was kept, while repeatedly claiming that the handling of the case was "appropriate."

What did the school operator exactly request? And how did the state respond? Did any political influence play a part in the negotiations? These are the core questions regarding the issue. The curtain should not be drawn on the scandal while parties involved claim different stories.

Kagoike had used the names of several politicians in soliciting support for the construction of the new elementary school. Since Prime Minister Shinzo Abe's wife Akie served as the honorary principal for the planned school at one point, suspicions surfaced that bureaucrats surmised the intentions of the Abe government.

The special investigation squad is also looking into a suspected breach of trust case after those involved in the land deal, including senior local finance bureau officials, were slapped with a complaint on suspicion that they sold off the national property at an unfairly discounted price, causing damage to the state. While hurdles to prove the illegality of their actions may be high, we hope that the probe unveils whether the process of deciding the price was appropriate.

Many questions regarding the Moritomo Gakuen scandal remain unanswered, including the authenticity of Kagoike's testimony that he received a donation of 1 million yen in cash by Akie Abe. She has not even appeared in public to give an account over the matter. The Diet still needs to work on revealing the truth about the issue.

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