The Board of Audit has found that 12 prefectures misused subsidies from the central government worth some ¥550 million over five years from fiscal 2002 through fiscal 2006. The subsidies were mostly from the Land, Infrastructure, Transport and Tourism Ministry and the Agriculture, Forestry and Fisheries Ministry. The findings may be just the tip of an iceberg since the board randomly selected the 12 prefectures for audits of subsidies coming mainly from the two ministries. If projects carried out independently by the prefectures are included, the misused amount reaches ¥1.13 billion.
Aichi Prefecture was found to have misused the largest amount of subsidies — about ¥130 million. (If its own projects are included, the misused amount reaches some ¥300 million.) Next was Iwate (¥115 million) followed by Hokkaido (¥60 million), Nagano (¥51 million), Wakayama (¥50 million), Kyoto (¥49.3 million), Fukushima (¥33 million), Gifu (¥31.8 million) and Aomori (¥25 million). Gunma, Oita and Tochigi misused about ¥9.8 million to ¥20 million.
These prefectures used subsidies for purposes different from the central government's intention — like business trips for prefectural government officials and employment of part-time workers for activities or projects the subsidies were not aimed at. Some prefectures placed fictitious orders to businesses, pooled the money at the companies, then used it for other purposes the next fiscal year, for example, to purchase personal computers.
Prefectural governments have not learned lessons from the past. In its 1996-98 probe the Board of Audit found that 23 prefectures had committed accounting irregularities worth a total of ¥43 billion.
The board should carry out similarly thorough audits of other prefectures and major cities as well as subsidies from other ministries. Ministries should rethink their subsidy policy so that local governments can use the funds more freely, within limits, but more honestly while ensuring transparency of use.