Japan may seek criminal charges over H.I.S. subsidy scandal

The Japan Tourism Agency may seek criminal charges against two subsidiaries of major travel agency H.I.S. Co. that are suspected of fraudulently receiving tourism promotion subsidies, officials said Tuesday.

“We’ll work together appropriately with investigative authorities and consider possibly filing a criminal complaint,” tourism minister Tetsuo Saito said during a news conference.

The government, which aims to resume its Go To Travel domestic tourism promotion campaign early next year, is apparently trying to prevent the recurrence of a similar case by showing a stern attitude toward the companies, which allegedly received financial aid under the campaign in a fraudulent way.

The agency, which operates the Go To Travel campaign, plans to demand swiftly that the H.I.S. subsidiaries return the money they received fraudulently.

Saito also revealed that the government has reprimanded H.I.S. for insufficiently supervising the two units.

Fraudulently receiving the tax-funded subsidies is something that should have not happened and is very regrettable, Saito said.

He ordered the parent company to uncover details of the scandal and come up with steps to prevent a recurrence. H.I.S. plans to report its preventive measures early next year.

On Tuesday, H.I.S. announced that Chairman and CEO Hideo Sawada will have his monthly pay cut by 75% for three months over the scandal. Two other executives of the company will also be punished.

The president of Miki Tourist Co., one of the two H.I.S. subsidiaries, will be dismissed, while the president of the other unit, Japan Holiday Travel Co., will be demoted.

At an online news conference, Sawada offered an apology. “I feel responsible for my failure in management,” he said.

On the same day, H.I.S. also reported that the scandal contributed to pushing down the company’s net balance by ¥395 million, bringing the net loss for the year through October to ¥50 billion, a record high.

According to a third-party committee appointed by H.I.S., the two units are suspected of fraudulently receiving up to around ¥683 million in financial aid, with hotel operator JHAT Co. being involved in the fraud cases.

The two H.I.S. subsidiaries and JHAT applied for subsidies totaling more than ¥1.1 billion, according to the agency. It will identify false subsidy applications among those filed by the companies for a total of some 60,000 stays and figure out the actual amount of money received illegally.

The agency plans not to allow the three companies to participate in the Go To Travel program even if it resumes.