Former Official Accused of Fraudulent Sale of COVID-19 Test Kits for 15.4 Million Yen

The Edogawa Ward Pharmaceutical Association, a public interest incorporated association, is composed of pharmacists in Edogawa Ward, Tokyo. FRIDAY Digital discovered that the chairman of the association had padded the purchase price of corona test kits and sold them to the Edogawa Ward Office. Furthermore, the pharmacists’ association, fearing the authority of its chairman, has been covering up the transactions and has yet to disclose this fact. Several former board members have accused the board of this.

An unprecedented incident occurred at the “Tokyo Edogawa Ward Pharmaceutical Association,” which has 177 member pharmacies and 255 member pharmacists.

The chairman of the Edogawa Ward Pharmaceutical Association, Don S., had been using his own pharmacies and the Rinkai Pharmacies operated by the association to sell the Edogawa Ward Office a watered-down version of the Corona vaccine. Mr. A, one of the former board members who has been pursuing the chairman’s misconduct, said, “The transactions in question took place in a pharmacy run by himself and a pharmacy run by the association.

The transactions in question took place between January and March 2010. During this period, we found that the pharmacy run by Mr. S wholesaled corona test kits to Rinkai Pharmacy, which in turn sold them to Edogawa Ward at an unfair price. The test kit delivered was a Rohto product called “CheckМR-COV19. I also run a dispensing pharmacy, so I know the cost of purchasing the product from the wholesaler. At that time, the price was 1,375 yen including tax. However, the price sold by Mr. S’s pharmacy to the district through Rinkai Pharmacy was 3,300 yen, including tax. In fact, the pharmacy sold them to the ward at a price that was 1,925 yen higher than the original price. Since 8,000 units were sold, the fraudulent amount was 15.4 million yen.

Another former board member, Mr. B, continued.

Of the 15.4 million yen that was paid by the ward, 11 million yen was paid to Chairman S’s pharmacy. The difference of 4.4 million yen remained in Rinkai Pharmacy’s account. The name of the payment was to the effect that it was “Rinkai Pharmacy’s commission for this transaction. Rinkai Pharmacy is run by the association, and I believe that no one could object to the way Mr. S, the chairman of the association, added an amount to the cost of goods purchased at his pharmacy and sold them to the ward as Rinkai Pharmacy.

The case came to light two years ago when the director of the Edogawa Ward Health Department was replaced. Originally, the previous director of the health department, who requested this transaction to Chairman S, had been a close friend of his for a long time. However, when the newly appointed director of the health department noticed the improper money movement and pursued the matter, the pharmaceutical association admitted to the padding of the account, and Chairman S refunded the amount of the padding. He also took responsibility and resigned as chairman in March 2011.

This would seem to have resolved the furore. However, this is not the case,” Mr. A laments.

Although at first glance it looks as if the matter has been settled, it has not. The pharmacists’ association had to return 15.4 million yen, including the 4.4 million yen remaining in the Rinkai Pharmacy’s account, to the district. However, the amount refunded by the Pharmacy Association last December was 14.96 million yen. The Pharmacy Association purported that the purchase cost of 11 million yen was subject to a 4% commission fee, and refunded the amount of 440,000 yen minus that amount.

Needless to say, this transaction was fraudulent by Chairman S and should never have existed. However, the pharmacy association continued to take the 440,000 yen, calling it a commission, even after the resignation of the chairman. It is hard to believe that they are remorseful. They still have not disclosed this transaction either.”

The former board members have been lobbying the Pharmaceutical Association to take up the issue. However, their claims were never accepted.

At the annual general meeting of the Pharmaceutical Association last May, some members asked, ‘Why don’t we file criminal charges against former President S. as a case of embezzlement in the course of his duties? However, he said, ‘This is a matter that we should consider more carefully in the future. The vice president’s response was a stopgap measure, saying, “We will refrain from giving a response. The easy way of thinking is to wait for the situation to cool down. I thought that the only way to revitalize the Pharmaceutical Association was to make this fact known to as many people in society as possible…I believe that only when the responsibility of not only the former president S. but also the Pharmaceutical Association as a whole is clarified, can the association be reborn as a new Pharmaceutical Association.”

FRIDAY Digital sent a letter of inquiry to the Edogawa Ward Pharmaceutical Association regarding the reality of the padded billing transactions of former President S. The following was the response regarding how the Pharmaceutical Association approved such an unauthorized transaction.

The transaction was approved based on the understanding that the price of 3,000 yen (3,300 yen including tax) was reasonable as the prevailing price at that time. (Omitted) The fact that the items were purchased at the former chairman’s pharmacy at the original price of 1,250 yen (1,375 yen including tax) was later called into question, and the board of directors again deliberated whether this was an appropriate response as a public interest corporation, and decided to refund the money to the ward as inappropriate. We have eliminated all involvement of the former president with the association, as such transactions by the former president are unacceptable as conflict-of-interest transactions.

Regarding the fact that some have called for the situation to be made public and that the fees have not yet been refunded, he responded as follows.

At this time, we have no plans to proceed with civil or criminal prosecution. Of course, if the members express their intention at a general meeting or other meeting, we will consider this in detail.

Since this case is a matter of public procurement procedures based on a voluntary contract, it is rather inappropriate for the fee to be zero or negative.
We have decided that a 4% fee is appropriate.

This transaction is in the form of a business embezzlement of taxes from the Edogawa Ward Office by the chairman of the Edogawa Ward Pharmaceutical Association, a public interest incorporated association, albeit for a short period of time. The pharmacists’ association is required to sincerely reflect on the situation and respond to the situation.