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Supercomputer firm president, ex-manager indicted over subsidy fraud

The Tokyo District Public Prosecutors Office on Dec. 25 indicted the president and a former executive of a Tokyo-based technology venture known for developing supercomputers on charges of defrauding the government of subsidies.

Motoaki Saito, 49, president of PEZY Computing based in the capital's Chiyoda Ward, and Daisuke Suzuki, 47, former manager of the firm's business development department, were slapped with fraud charges. Saito has admitted to the charges against him, according to a source familiar with the case. The prosecutors office's special investigation unit is set to continue its investigation alleging that the two men illicitly received subsidies for other projects as well.

According to the indictment, Saito and Suzuki teamed up to submit a false business performance report to the New Energy and Industrial Technology Development Organization (NEDO) under the jurisdiction of the Ministry of Economy, Trade and Industry between February and March 2014. The report stated that it cost the firm approximately 773 million yen to work on a NEDO-subsidized fiscal 2013 project for turning innovations to practical use, though it had actually cost the firm up to about 140 million yen. Of the approved grant of some 500 million yen, the company is believed to have swindled around 431 million yen under the fraudulent scheme.

Saito has told investigators, "As it requires a massive amount of funds to carry out research, we used the subsidies in a separate development project," according to informed sources. The special investigation unit suspects that Saito ordered Suzuki to create a false corporate performance report by padding the costs to outsource work to an affiliated firm.

In a related development, the Japan Science and Technology Agency (JST) under the jurisdiction of the Ministry of Education, Culture, Sports, Science and Technology has launched an investigation into the case as the JST had decided to extend loans to a company chaired by Saito. The financial assistance was part of the approximately 10 billion yen in loans and subsidies that JST and other government bodies decided to provide to several companies where Saito serves on the board.

NEDO agreed to subsidize PEZY Computing for five of its projects including the one for which Saito and Suzuki were indicted, with the amount of subsidies totaling some 3.52 billion yen. JST had also decided to extend 6 billion yen in interest-free loans to ExaScaler Inc., a Chiyoda Ward-based supercomputer development company chaired by Saito.

A JST official told the Mainichi Shimbun, "We are not aware of receiving any fraudulent applications." Nevertheless, the official suggested that the agency is planning to question officials of ExaScaler.

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