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Affiliate of supercomputer firm accused of fraud given gov't loan above limit

A company affiliated with a venture company that develops supercomputers and is at the heart of a subsidy fraud scandal exclusively received an interest-free loan from a government body that exceeded the upper limit of 5 billion yen, it has emerged.

The revelation was brought to light by Michinari Hamaguchi, president of the Japan Science and Technology Agency (JST) -- which is under the jurisdiction of the Ministry of Education, Culture, Sports, Science and Technology -- during a House of Representatives Budget Committee session on Jan. 30. Hamaguchi disclosed the information in response to a question from Party of Hope legislator Masato Imai.

In January 2017, JST decided to lend 6 billion yen (about $55.1 million) in order to cover supercomputer development costs, to ExaScaler Inc. -- which is chaired by Motoaki Saito, 50, president of PEZY Computing, the venture company that is at the center of the fraud scandal. The loan was made as part of a JST initiative that provides interest-free loans to firms embarking on high-risk, large-scale development projects. Apparently 5.2 billion yen of the 6 billion yen has already been paid.

According to JST, the range of its loans is between "at least 100 million yen and up to and including 5 billion yen." The agency has approved 30 loans to companies including ExaScaler, during its past five offerings, but it has only loaned an amount greater than the 5 billion yen upper limit to ExaScaler.

During the lower house panel session on Jan. 30, Hamaguchi touched on text in JST loan application paperwork stating that requests for loans greater than 5 billion yen could be accepted. Hamaguchi said: "We have not approved loans above the limit (other than ExaScaler), but there have been applications over the maximum (from other companies)."

He added, "We have examined loan applications stringently. The judgment was made by an evaluation panel made up of experts" -- revealing his opinion that there were no problems concerning the application or approval process.

Moreover, as for ExaScaler's application in October 2016, and the fact that the application period was set for two weeks, which was shorter than usual -- thereby keeping the number of applicant firms down to just ExaScaler and one other -- Imai said, "It cannot be ruled out that there was preferential treatment toward Saito's company."

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