TOKYO (TR) – Japanese prosecutors arrested the former chairman of Daio Paper after he admitted to a breach of trust in connection to the transfer of company funds to his personal account, Kyodo news service said.
Prosecutors questioned Mototaka Ikawa, 47, over the weekend after the paper maker filed a criminal complaint against the grandson of the company’s founder in connection to $140 million (10.6 billion yen) he borrowed from seven of its subsidiaries. The 58-year-old company disclosed in October an internal investigation found accounting irregularities dating back to May 2010.
The Kyodo report said the arrest is in connection to $41 million (3.2 billion yen) in damages. Ikawa purportedly told prosecutors he used the money to gamble at overseas casinos, the news service reported, citing investigative authorities.
Prosecutors are still investigating the full scale of Ikawa’s financial irregularities, Kyodo said.
In a statement to shareholders, Daio apologized for the incident. Ikawa resigned his post in September while his father was fired from his advisory role and his brother was forced to step down from the company’s board of directors.
It’s the second major business scandal in Japan in the past two months. Camera and medical device maker Olympus is currently embroiled in a massive financial irregularities investigation. The 92-year-old company publicaly admitted to hiding investment losses that date back decades.