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Contractor testifies to being told to inflate costs in Moritomo subsidy fraud trial

Defendants Yasunori Kagoike, right, and Junko Kagoike are seen at a press conference in this file photo taken in Osaka's Kita Ward on May 25, 2018. (Mainichi/Yoshiyuki Hirakawa)

OSAKA -- A contractor testifying in a fraud trial surrounding school corporation Moritomo Gakuen told the Osaka District Court on May 31 that the corporation's former chairman and his wife ordered the firm to pad figures to win bigger subsidies for an elementary school project.

The testimony was presented in the third hearing of the trial of former chairman Yasunori Kagoike and his wife Junko, presided over by Judge Takushi Noguchi. Public prosecutors accuse the couple of fraudulently obtaining state and local subsidies for the Osaka-based school corporation, which became embroiled in a cronyism scandal linked to Prime Minister Shinzo Abe's wife Akie.

"The defendants told me 'We want a lot of subsidies' and instructed me to inflate construction costs," the manager of the contractor hired to design the elementary school building told the court.

Prosecutors said that at the instructions of the two defendants, the designer in 2015 prepared a subsidy application that padded design and construction costs to approximately 2.3 billion yen. Real costs were actually in the region of 1.4 billion yen, but estimates shown to the Osaka Prefectural Government, which gave permission for the establishment of the school, listed a cost of some 700 million yen to give the school operator an appearance of financial stability.

Under witness interrogation, the manager of the design firm testified that Junko Kagoike had requested the inflated figures, saying that she wanted to take lots of subsidies and rip off the government. He said he was shocked by the demands, but did as he was told and inputted the figures.

The manager further testified that he had heard Yasunori Kagoike say, "We're calling it the Shinzo Abe Memorial Elementary School so lots of tradesmen will cooperate with us. We can get the materials cheaply."

According to the prosecution's indictment, between fiscal 2011 and 2016, the defendants fraudulently amassed around 177 million yen in state, prefectural and city subsidies for the operation of their kindergarten and the construction of the new elementary school.

(Japanese original by Masayuki Takashima and Shiho Matsumoto, Osaka City News Department)

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