Tokyo prosecutors have arrested 12 people in a case of alleged tax evasion on kickbacks received from contractors.

It is thought that consultant Daiko concealed ‘consultancy fees' of up to JPY 1.2 billion (US$ 13 million) and evaded corporation tax of JPY 300 million (US$ 3.3 million) in return for exerting influence on the award of construction contracts by electronics giant Canon.

The latest arrests are Norihisa Oga, president of Daiko and Sukekatsu Nagata, a local politician. They are thought to have conspired with another company, Naniwa Consultants International whose president Hideo Nanba has also been arrested.

Prosecutors allege that Mr Oga used friendships and political connections to influence the award of up to JPY 120 billion (US$ 1.32 billion) of construction work by Canon.

He is thought to have solicited payments from the contractors, which included Japan's largest, Kajima, and that this income was allegedly concealed to avoid paying Corporation Tax.

The funds received by Mr Oga are alleged to have been concealed with falsified orders for construction projects. Mr Oga denies all charges against him.

Canon is reported to be "extremely angry" that projects it commissioned have apparently been a vehicle for fraud and tax evasion.

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