A “huge amount of money laundering” at a long-established jewelry company that has been in the news for its “corruption at the Olympics | FRIDAY DIGITAL

A “huge amount of money laundering” at a long-established jewelry company that has been in the news for its “corruption at the Olympics

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Haruyuki Takahashi just before his arrest. He took one look at the press as he got into the luxury car that took him from his home

A subordinate of the arrested “former Dentsu executive director”…

Nagahori, a major jewelry manufacturer that has been in business for 60 years, is in turmoil.

Nagahori was known as a publicly traded company that expanded its business by opening stores in department stores, but in recent years its performance has been sluggish and its stock price has been low. The first unusual change occurred in early spring.

The first was a stock buyout and a sharp rise in the share price, followed by an ongoing exchange of letters of inquiry with the “controlling shareholder,” who had risen to become the company’s largest shareholder. The current management team has taken a defensive stance against the takeover by inviting former police commissioner Toshiro Yonemura as an advisor, and the conflict between the two sides has continued to intensify since the general shareholders’ meeting in June.

The “aftermath” of the Tokyo Olympics, which is now under investigation by the Tokyo District Public Prosecutors Office, is also attracting attention.

Nagahori obtained an official license for the 1998 Nagano Olympics and sold rings and 18-karat gold pendants decorated with the Games mascot, and was an early mover in obtaining an official license for the Tokyo Olympics. The key person in this process was Kazumichi Iwakami, a former executive officer of Dentsu who joined the company as an outside auditor in June 2004. It was said within the company that the acquisition of the official license was due in part to the influence of Iwagami, who had served as vice president of the Japan Football Association and president of the Japan Women’s Football League. He sold pure gold koban, platinum koban, jewelry, and other items for approximately 4 billion yen,” said a person related to Nagahori.

Iwakami, who had experience in soccer since his school days, also worked in the ISL Business Bureau, which was in charge of sports marketing, during his time at Dentsu. He was a subordinate of Haruyuki Takahashi, former senior managing director of Dentsu, who was arrested on suspicion of commissioned bribery as a central figure in the Olympics scandal. As the case spread, some within Nagahori were concerned about the relationship between Mr. Iwakami and Mr. Takahashi (Nagahori responded that “there is no fact that Kazumichi Iwakami was instrumental” in the official licensing agreement).

It was Keita Nagahori, the eldest son of Nagahori’s founder and current president, who promoted the Olympics business. In fact, the subsidiary for which Mr. Nagahori serves as a director has been involved in an unprecedented trouble involving the police, which is more than just the aftermath of the Olympics issue.

The subsidiary where the trouble took place is Nakaniwa Watch Store, which Nagahori acquired in September 2002 and which is headquartered in Osaka. Nagahori originally had a number of directly managed department stores in the Kanto region, but had no foothold in western Japan, and decided to make Nakaniwa Watch Store a subsidiary with the aim of expanding its market share.

However, from the outset, there were concerns about the future of the company.

The “incident” that infuriated the major department stores

A former employee of Nakaniwa Watch Store told us, “Nakaniwa used to deal in high-end watches.

A former employee of Nakaniwa Watch Store said, “Nakaniwa used to deal in high-end watches, but sloppy management had been pointed out for some time. When taking inventory, we would normally check the actual items against the documents once every three months, but even if there were watches that had been loaned to another store, we did not follow up on the details and just made do as long as the total number of watches was correct.

The November 2005 inventory revealed that Mr. A, an employee of Nakaniwa Watch Store, had been cheating in order to increase sales results. He repeatedly committed these acts. He also used some of the money he converted into cash to pay for his own food and beverages, resulting in a loss of approximately 43 million yen.

The chain of fraud continued, with employee B, who had been with the company for more than 10 years, selling 41 luxury watches to his own major clients from April 2004 to May 2005, despite the fact that he was not authorized to do so. Not only did he fail to pay approximately 54 million yen, but he also caused serious problems with a limited edition Richard Mille watch worth 12 million yen that was entrusted to him by a 20-year-long customer of Sogo Seibu, a major department store customer, for free periodic maintenance. It was later discovered that the glass of the entrusted watch was scratched. In order to hide the inadequate handling of the situation, the watch was sent to an undesignated repair company that undertakes repairs at a low price through an introducer. Because the watch was not repaired through official channels, it took a long time to repair the watch, and the company was unable to collect it.

Naturally, Sogo Seibu was furious, and Nakaniwa Watch Store jointly submitted a document with its parent company, Nagahori, to pay 12 million yen as a settlement.

Mr. B in question resigned in June 2006. Later, however, Mr. B told a junior current employee, “A certain customer wants to see a watch. I want you to prepare several items somehow. He told him that the watches would be returned to him in a short period of time, so he should be fine.

Mr. B refused to return the watches even after repeated requests from the current employee, explaining that he would exchange them for another watch if he brought it back. The current employee, troubled by the situation, consulted with a senior employee, Mr. C. Mr. C gave him an Omega worth 7 million yen that he had received from another customer and instructed him to retrieve the watch he had given to Mr. B. However, this time, the Omega could not be retrieved. . Eventually, in response to Mr. B’s request, Mr. C took the watches one after another over a period of about six months, and at the time of the inventory in September 2007, this fraud was discovered. As a result, it was discovered that Mr. C had taken 105 watches worth 200 million yen.

Limited edition koban made by Nagahori for the Tokyo Olympics. This one was made of platinum, while others were made of pure gold.

Cartier’s “undercover investigation” uncovered

Although Mr. C. was a skilled salesman who had a good clientele in the outside sales department, he lacked a strong sense of propriety and was viewed as a problem within the company from the beginning. He had been viewed as a problem within the company from the very beginning.

When Mr. C was working at the Seibu Otsu store (now closed), it was revealed that he habitually sold luxury brand Cartier products wholesale to vendors who were not Cartier dealers. Cartier contractually requires direct sales in order to enhance the value of its brand, and undercover investigations are conducted to check serial numbers, but in the process, it was discovered that products wholesaled to Nakaniwa Watch Store were being sold to secondary wholesalers. As a result of this incident, Nakaniwa Watch Store was deprived of its Cartier dealer status, and Mr. C was temporarily transferred to Nagahori’s store in Hiroshima.

Mr. B, who had encouraged Mr. C’s bad behavior, gave the luxury watches to a watch dealer who acted as an intermediary for Richard Mille’s repairer, who in turn took them to several pawn shops.

Naturally, this is a “crime” that should have resulted in a criminal case, but it was about seven weeks after the crime was discovered that Nakaniwa Watch Store reported the theft to the Otsu Police Station of the Shiga Prefectural Police, which has jurisdiction over the matter. The report was accepted on October 23, 2007.

A person related to Nakaniwa Clock Shop who knows the situation reveals, “Kunimatsu Tadamatsu of Nakaniwa Clock Shop was the victim.

A person related to the Nakaniwa Watch Store who knows the circumstances reveals, “President Tadao Kunimatsu of the Nakaniwa Watch Store advised Mr. C. that Mr. C. had been taking watches out of the store, and in a sense, he tolerated Mr. C. who was making sales even if he took watches out. He also seems to have said that President Kunimatsu instructed him to go to Nagahori’s legal counsel for advice. The reason why the damage report to the police was not in the form of embezzlement but only in the form of theft damage was probably due to the prospect that the watches could be recovered free of charge if the stolen goods were in the form of being brought to a pawn shop. In fact, in parallel with the damage report, a lawsuit for restitution of movable property was also filed against the five pawn shops.”

Nagahori’s response…

It is customary for the local police to enter and inspect pawnshops about once a month to check the antique ledgers and other documents to see if there are any stolen items, so it is difficult to believe that the pawnshop owner knew the items were stolen and handled them knowingly. The hurdle for filing a lawsuit for the return of movable property was not low, but it was the investigation by the Otsu Police Department about a year later that added to the difficulty.

In October 2008, the Otsu Police Department informed the Nakaniwa Watch Store of its policy of “making a case for embezzlement, not theft, because there are no detailed regulations in the company’s internal rules that prohibit taking items out of the store,” and reported that it planned to arrest Mr. C soon. However, since embezzlement would undermine the basis of the restitution lawsuit with the pawnshop and cut off any chance of recovery, Nakaniwa Watch Store decided to withdraw the damage report after consulting with Nagahori’s side.

Mr. C, who was eventually dismissed on disciplinary grounds, later signed a debt repayment agreement with Nakaniwa Watch Store and is currently working as a hired manager at a convenience store to make repayments.

The case has dissipated into thin air, and despite the massive amount of money laundering trouble, President Kunimatsu’s punishment was only partial, including a three-month pay cut. Nagahori, who was also a director of Nakaniwa Watch Store, and others were not punished, claiming that they were not involved in any wrongdoing or wrongdoing that should be the subject of punishment.

When we sent a letter of inquiry to Nagahori on October 12, Nagahori announced the circumstances of the troubles on its IR website the following day. In a letter signed by the general manager of the Administration Division’s General Affairs Department, Nagahori stated, ” It is a fact that multiple fraudulent acts were committed by the employees of Nakaniwa Watch Store.

The police were of the opinion that it was possible to make a case of embezzlement but difficult to make a case of theft (in the case of the mass theft and pawnshop pawnshop pawnshop), so we followed the court’s legal order and negotiated a settlement. As a result, we paid the pawnbroker an amount equivalent to the cash obtained by the former employees who committed the fraud as a condition for the return of the pawned goods, and received the return of all the pawned goods.

After the allegations were discovered, the company dispatched management personnel to Nakaniwa Watch Store to investigate similar cases and strengthen its management system.

Although the company is claiming that everything has been “resolved,” the series of troubles is likely to have an impact on its future battles with the “silent” shareholders.

  • Interview and text by Nobuhiko Nishizaki (nonfiction) Nobuhiko Nishizaki (Nonfiction writer) Photo by Shinji Hasuo (1st photo)

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