Travel Agency Owners Arrested for ¥650 Million COVID-19 Subsidy Fraud in Japan

The Metropolitan Police Department announced on the 5th the arrest of Kaoru Sakagawa, 56, president of the travel agency JCIT (Chuo Ward, Tokyo), and her husband, Meng Wei, 53, a director at the same company, on suspicion of fraud. They are accused of illegally receiving approximately 650 million yen (about 4.1 million US dollars) in "Employment Adjustment Subsidies," a government support measure for businesses impacted by the COVID-19 pandemic. The suspects are alleged to have inflated employee numbers and other details between 2020 and 2022 to defraud the system.

According to investigative sources, JCIT is a travel agency primarily serving Chinese tourists. The Metropolitan Police Department suspects that the fraudulently obtained subsidies were used to purchase an apartment in Chuo Ward, a substantial plot of land in Yamanashi Prefecture (approximately 750 tsubo or 2,475 square meters), and luxury cars.

Ms. Sakagawa came to Japan in September 1992, enrolled in a Japanese music academy, engaged in music activities, and subsequently established her travel agency in 2003. Mr. Meng's Chinese nationality has been confirmed, and there is public interest on social media regarding Ms. Sakagawa's nationality and the possibility of her naturalization.

The arrested couple reportedly denies the allegations, stating they "did not believe it was illegal."

This massive fraud case has sparked outrage on social media, with comments such as "Japanese taxpayers' blood money was stolen," "They should repay the full amount," and "Confiscate assets and deport them." There are also widespread concerns that similar fraudulent claims may exist. Furthermore, some media outlets have faced criticism for not reporting Mr. Meng's Chinese nationality.

The Metropolitan Police Department continues to investigate the flow of funds and the full scope of the incident.

The context

Employment Adjustment Subsidies (Koyo Chosei Josukin): This is a Japanese government program designed to help companies maintain employment during economic downturns, such as the COVID-19 pandemic. It subsidizes a portion of the salaries and allowances paid to employees temporarily furloughed or undergoing training, thereby preventing layoffs. The program was significantly expanded during the pandemic to support businesses struggling with reduced demand, particularly in sectors like tourism.

"Tsubo" (坪): A traditional Japanese unit of area, approximately 3.3 square meters (or 35.58 square feet). 750 tsubo is a significant plot of land, roughly 2,475 square meters or about 0.61 acres, indicating a substantial purchase.

Nationality and Public Sentiment: The mention of Mr. Meng's Chinese nationality and public speculation about Ms. Sakagawa's background touch upon sensitive topics in Japan. When high-profile fraud cases involve public funds, particularly those linked to individuals with foreign ties or naturalized citizenship, it often triggers strong public reactions, including discussions about immigration and the perceived misuse of taxpayer money.

Tourism Industry during COVID-19: The travel industry, especially companies catering to inbound international tourists like JCIT, was among the hardest hit by travel restrictions and border closures during the pandemic. While this made them eligible for substantial government aid, it also created opportunities for fraudulent claims due to the sudden and drastic downturn and the urgency of support measures.