The Unraveling Begins

Here we go. With Sahashi arrested and being questioned, the details behind NOVA's meltdown are starting to trickle out.

The Asahi Shimbun: reports that the amount of money Sahashi was in the hole for was huge. Although he's been arrested for embezzling ¥320 million, internal NOVA documents show that when the company's cash flow dried up after the Supreme Court's ruling, NOVA needed to refund at least ¥3.687 billion to students.

Through internal documents, we learn of how how fast the wheels came off of the NOVA gravy train: unpaid refunds for June totaled ¥152 million, ¥426 million for July, ¥154 million for August, and a little more than ¥3 billion by October.

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It gets worse as the Sankei Shimbun reports that Sahashi may have pilfered the employee's fund in order to protect his own personal fortune.

According to the article, Sahashi he didn't think that using the money from the employee's welfare fund was a crime. That comes as no surprise knowing how arrogant the man is. The police also learned that Sahashi has assets worth more than ¥500 million. The police believe he used the fund to protect his own assets.

Sahashi instructed Toshihiko Murata to deposit the welfare fund via NOVA Kikaku into a NOVA bank account.

According to an official, Sahashi netted himself around ¥10 billion through dividends and the sale of stock in 1996. He then invested much of his own money into developing the ocha no ma ryuugaku system for Ginganet, a communications company which he owned. However, with NOVA's cash situation grave, it is believed that Sahashi had no choice but to the pilfer the employee's welfare fund as the value of his assets--cash, stocks, and real estate-- plunged to between ¥500 million and ¥1 billion yen.

Investigators are looking into the possibility that Sahashi embezzled the money from the fund as using his own money to pay for refunds wouldn't have been enough.

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describes how Sahashi personally ordered a stop to paying out refunds.

The article notes that Sahashi was sent to Osaka district prosecutors this afternoon. It recaps that NOVA was raided last February, and then lost in the Supreme Court in April. That's when they started losing students. New enrollments dried up and sales for April and May were one sixth and one quarter the totals for the previous year. Ten days before Sahashi ordered refunds to stop, a deal for financial assistance with a major distribution company fell through.

The Asahi article goes on to note that around the end of May, NOVA couldn't make its shakai hoken payments, and school documents show that in June NOVA was delinquent in its payments to the tune of around ¥800 million. It was at this point that NOVA management instructed accounting to just pay salaries and that something would be worked out in the event salaries could not longer be paid.

Comment: The non-payment of pension and health contributions (shakai hoken) cannot be overlooked. The government hates it when they don't get what's coming to them. I have a feeling that they will throw the book at Sahashi if they find out he was collecting shakai hoken and withholding payment.