Postal scam divvied up savings

THE ASAHI SHIMBUN

2009/4/18

Investigators looking into abuse of a postal discount system say the perpetrators figured out in advance how to divvy up the 240 million yen the scam would produce in savings, sources said Friday.

Prosecutors on Thursday arrested 10 people on suspicion of cheating the postal discount system for disability support groups. The discount was allegedly used for direct mailings by Best Denki Co., a Fukuoka-based retailer.

The direct-mail campaign was handled by Hakuhodo Erg Inc., a subsidiary of advertising agency giant Hakuhodo Inc. Sources said the Fukuoka-based Hakuhodo Erg and its parent company received about 20 percent of Best Denki's direct mail advertising budget.

The other companies and organizations involved also received several yen for every item of mail sent by Best Denki, sources said.

Investigators from the Osaka District Public Prosecutors Office searched the offices of Hakuhodo Erg on Friday for evidence to trace the flow of money from Best Denki.

Investigators also searched the Ginza branch of Japan Post Service Co. On Thursday, they searched the New Tokyo branch in Tokyo's Koto Ward.

Sources said all the approximately 2.14 million pieces mailed from Best Denki under the discount were sent out from those two Japan Post Service branches.

Investigators are trying to determine whether any Japan Post Service employees were involved in approving the use of the postal discount system for the Best Denki bulk mailings.

To pay for the mailings in February 2007, Best Denki prepared a direct-mail advertising budget of more than 100 million yen, sources said.

About 20 percent of that budget, roughly 30 million yen, was paid to Hakuhodo Erg and its parent company in exchange for telling Best Denki about the mailing service.

The two companies split the cash evenly, sources said.

Wellco Co. of Hakusan, Ishikawa Prefecture, which printed all the direct-mail advertising materials, received 4 yen from Best Denki for each piece that was mailed, or about 8.5 million yen in total.

Similarly, 5.5 yen for each piece of mail went to Shinsei-Kigyo Co., which had tipped off Wellco officials about the postal discount system for disability support groups.

Of the amount paid to Shinsei-Kigyo, 3 yen per item of mail went to two disability support groups, Hakusankai and Kenko Forum, both based in Tokyo.

Publications by the two organizations were included in the mailings to allow them to appear to qualify for the discount system.

Shinsei-Kigyo and the two organizations received between 1.5 million and 5 million yen from the scheme, sources said.

Officials from Best Denki, Hakuhodo Erg, Wellco, Shinsei-Kigyo and the two disability support groups were arrested Thursday on suspicion of conspiring to abuse the postal discount system.

Investigative sources said similar rules to reward groups assisting in such mailings were in place for other direct mailings made by Best Denki.

Between August 2005 and February 2008, Best Denki sent out about 11.9 million pieces of mail using the postal discount system.

While Best Denki would normally have had to pay 120 yen per piece, it paid as little as 8 yen per item through the discount, which was created to assist disability support groups.

Sources said Best Denki saved about 1.3 billion yen in postage through the scheme.(IHT/Asahi: April 18,2009)