OSAKA (TR) — The dark underbelly of Japan’s welfare system has been exposed after an Osaka-based disability employment support provider was accused of illegally siphoning roughly 15 billion yen in government benefits, reports NHK (Apr. 224).
On March 27, the City of Osaka announced the revocation of designations of four “Type A continuous employment support” facilities operated by Kizuna Holdings, effective May 1. The city is demanding the return of 11 billion yen — which includes penalties on the 7.9 billion yen Osaka alone paid out — and is considering filing criminal complaints.
Under the state’s welfare system, businesses receive a lucrative bonus when disabled clients successfully transition to regular employment and remain employed for at least six months.
However, Kizuna Holdings allegedly exploited a massive loophole in what insiders dubbed the “36-Month Project.” The company systematically “hired” its own disabled clients as regular staff for exactly six months to trigger the massive government payouts. Once the bonus was secured, the individuals were reverted back to “client” status, only to be recycled through the loophole again.
Between 2024 and 2025, over 1,100 clients were caught in this endless loop across 75 municipalities in seven prefectures.
“It was welfare in name only, merely a scheme to suck up money,” one local official noted.
YouTube videos
The reality inside the facilities was even more grim. Former clients and staff revealed that no actual vocational training took place. Instead, disabled individuals were left to “self-study,” which largely consisted of sitting in a room watching YouTube videos.
“I feel like we were just being used as pawns for them to fraudulently receive benefits,” an outraged former client said. “I feel completely disgusted.”
Profit-driven
Meanwhile, company executives allegedly lived lavishly off the scheme. A former employee told reporters that the operation was purely profit-driven. “They bought more than two luxury tower apartments and drove sports cars using their executive compensation,” the employee revealed.
Following the city’s crackdown, Kizuna Holdings released a statement apologizing for the situation and announcing the closure of the four facilities by the end of April. However, the company remains defiant, disputing that their methods were illegal and vowing to fight the administrative decision in court.
With 15 billion yen missing and hundreds of vulnerable individuals left without genuine support, the case has sparked widespread outrage and calls for the government to close the loopholes in its incentive-heavy reward system.
