Tax authorities on Thursday searched the Tokyo headquarters of the nation's largest labor union over allegations it used a dummy insurance agency to secure slush funds and failed to declare taxes.
According to officials of the All Japan Prefectural and Municipal Workers' Union (Jichiro), an insurance agency set up to handle long-term mutual aid policies on behalf of the union's headquarters received some 300 million yen in commissions from a life insurance company for nine years up to 1998. The insurance agency was liquidated in January 1999 after its shady accounting came to light, sources close to the case said.
Of that amount, Jichiro headquarters received roughly 80 million yen. However, 60 million yen of this amount did not appear in accounting records, and no taxes were declared on the money, which tax officials have determined to be income from the activities of the union's profit-making business. The union is legally exempt from paying taxes as a social corporation.
How the remaining 220 million yen was spent remains a mystery, and sources close to the investigation said prosecutors suspect that senior Jichiro officials were involved in covering up the use of the money.
Tax officials also searched the main office of the union's mutual aid organization located nearby.
Also on Thursday, special investigators of the Tokyo District Public Prosecutor's Office searched Jichiro's headquarters in connection with an embezzlement case involving an affiliate firm.
Three men, including two senior officials of UBC Corp., a data-processing firm linked to the union, were arrested Wednesday on suspicion of embezzling some 38 million yen.