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.
According to reports submitted to the Foreign Ministry and other materials, the Intercultural Communication Foundation based in Chiyoda Ward, Tokyo, develops conversational English teaching materials meant for children and distributes them for profit to schools and educational organizations.
The foundation also conducts certification tests for foreign-language speaking ability.
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.
The foundation was instructed by the Foreign Ministry to improve it administrative practices as the ministry pointed out that its clerical practices were inadequate.
A source close to the foundation said, “It was a donation disguised as a business transaction. We were instructed by Sahashi on transaction prices and other things.”
A former Nova executive said, “Sahashi seemed to employ the foundation as an instrument to enhance his authority as well as to form relationships with politicians.”