Why Sahashi is Hiding

It's all starting to unravel for Nozumu Sahashi. He's in hiding for two reasons: the link between him and a stock speculator has become clearer, and he has been found to have funneled money to an organization he owned.

The link to the stock speculator:

A group of stock speculators charged by the Osaka District Public Prosecutors Office on suspicion of violating the Securities and Exchange Law, had been involved in a Nova capital expansion plan, the Yomiuri has learned.

The plan had been promoted by former Nova President Nozomu Sahashi, who was dismissed Thursday. Sahashi's financial problems may have led him to contact the group, as such groups control stock prices to gain illegal profits. Nova's court-appointed administrators stated that the move was grounds for Sahashi's dismissal.

According to sources, Sahashi had contacted the group led by Haruo Nishida, 57, an investment adviser who was arrested by the prosecutors on Oct. 12 on suspicion of manipulating the price of a construction company stock.

Nova announced on Oct. 9 it would issue stock warrants facilitating the purchase of 200 million new stocks, nearly three times the stock that had been issued, to two investment funds, with a view to securing about 6.4 billion yen. The funds are located in the Virgin Islands.

Nishida is said to have known people related to the investment funds and invited investors to Nova's plan before it was announced.

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A stock speculator arrested for alleged market manipulation has claimed to have had links with two tax haven-based funds ousted NOVA Corp. President Nozomu Sahashi had been trying to get to prop up the failed English conversation school chain, the Mainichi has learned.

Haruo Nishida, 57, the speculator arrested by the Osaka District Public Prosecutors Office earlier this month for stock manipulation, claims to have been involved in the setting up of the two funds based in the British Virgin Islands.

Sahashi, however, vehemently denied the claims.

"I've never heard of Nishida, nor have I met him," Sahashi told the Mainichi before he was axed by his board last Thursday. "A lawyer was dealing with the funds and I've heard the lawyer has had nothing to do with him, either."

Comment: Sahashi is talking to the media now?

The funneling of money to an organization Sahashi owned:

Nova Corp. funnelled about 100 million yen over seven years to March to a foundation under the jurisdiction of the Foreign Ministry at which former Nova president Nozomu Sahashi acts as managing director under the pretense of buying and selling teaching materials, sources said Sunday.

While Nova did develop teaching materials and conducted a certification test for the foundation, the foundation then sold the materials back to Nova at a profit. The foundation admits the money was a virtual "donation" from the language school chain operator, which on Friday filed for court protection from creditors under the Corporate Rehabilitation Law and dismissed Sahashi as president.

The directors of the foundation include former House of Representatives member and former Construction Minister Masaaki Nakayama, who has a close relationship with Sahashi. A source close to Nova said Nova derived no benefit from the arrangement.

[...]

The foundation's business income, excluding donations, totaled 600 million yen from fiscal 2000, all of which were earned through the transactions with Nova.

In fiscal 2006, the foundation paid Nova about 158 million yen as fees for publishing and printing the teaching materials, while it recorded about 176.5 million yen as a profit for the distribution of books and materials sold to Nova and another for the certification test. As a result, it obtained a profit of about 18.5 million yen.

In practical terms, only one director worked full-time at the foundation, and development, marketing and screening of education materials were done by Nova.

Business transactions between the foundation and Nova continued even after Nova plunged into the red in the 2005-06 business years. The foundation made a total profit of 39 million yen in the two years.

The earned profits were spent for expenses to hold annual forums on food culture, in addition to paying office rent and entertainment expenses for the foundation's directors.

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Embattled English language conversation chain NOVA Corp. is attracting attention for the murkiness of its share trading, its receivers said over the weekend.

Some management records have disappeared and wild fluctuations in its share price have been pointed out as appearing unnatural.

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Former NOVA Corp. President Nozomu Sahashi and his family's stake in the failed language school operator declined from over 70 percent to less than 20 percent over a two-week period in September without a legally required report, it emerged on Monday.

Receivers for NOVA are considering filing a criminal complaint with law enforcers against Sahashi if it is proven that he sold the shares without filing a report with authorities.

The law regulating transactions in financial organizations requires a major shareholder with a 5 percent stake in a firm or more to report to authorities within five business days any sale and acquisition of its shares.

As of Sept. 14, NOVA Kikaku, run by a relative of Sahashi, owned 36.03 percent of shares in NOVA Corp and Sahashi held a 35.56 percent in the group, totaling 71.59 percent, according to a report the former president submitted to the Kinki Financial Bureau on Sept. 25.

It has emerged that the stake held by NOVA Kikaku and Sahashi had declined to 3.69 percent and 16.02 percent, respectively, by Sept. 30, totaling 19.71 percent. Neither Sahashi nor NOVA Kikaku has submitted a report on the sale of the shares.

The walls are slowly closing in on him. I suspect the truth will emerge as the focus shifts from trying to rebuild Nova to building a criminal case against Sahashi.