A farm body paid more than 400 million yen in unnecessary subsidies to companies affected by the outbreak of mad cow disease in domestic cattle, the Board of Audit said Thursday.
The government-run board has asked the Agriculture and Livestock Industries Corp. to improve its procedures for handling subsidies.
Of the roughly 10 billion yen that ALIC paid in fiscal 2001 and 2002 to cover the costs of disposing of meat-and-bone meal -- a cattle feed considered the probable cause of the disease -- about 440 million yen was paid to cover consumption tax payments, which the corporation is not required to shoulder, according to the board.
ALIC was a government-backed corporation at the time but is now an independent administrative body.
It was in charge of paying subsidies to meat-and-bone meal manufacturers. After the outbreak of mad cow disease -- or bovine spongiform encephalopathy -- in Japan in fall 2001, the government banned the feed and incinerated supplies.
As a formality, ALIC should have paid the subsidies to the feed makers via the Japan Livestock Byproduct Association. But because the incineration companies the manufacturers contracted were demanding prompt payment, the body paid most of the subsidies directly to them.
In paying the incineration costs, the body also paid the 5 percent consumption tax, which was not supposed to be included in the subsidies.
In a Board of Audit survey, most of the feed makers claimed they had no idea they were responsible for the consumption tax.