Prosecutors arrested former Kanebo President Takashi Hoashi and two other former executives of the firm Friday on suspicion of submitting falsified financial statements to authorities.
Hoashi, 69, former Vice President Takashi Miyahara, 63, and former executive Kenzaburo Shimada, 59, were held after being questioned by the Tokyo District Public Prosecutor's Office. They apparently wanted to show the firm was still making a profit despite its massive debts, investigative sources said.
The arrests follow allegations that the trio covered up more than 70 billion yen in capital deficit in fiscal 2001 and 2002, and 5.7 billion yen in net loss on a consolidated basis in fiscal 2001, the sources said.