Nova

The former president of Nova Corp., once Japan’s biggest English-language school operator, was found guilty of embezzlement and sentenced to prison by the Osaka district court, the Asahi newspaper said.

The court found today Nozomu Sahashi redirected 320 million yen ($3.4 million) from his employees’ welfare program to the company before its bankruptcy in 2007, the Asahi reported, citing judge Hiroaki Higuchi. Sahashi, 57, was given a sentence of three years and six months.

Sahashi founded Nova in 1981 and the Osaka-based company had more than 900 branches at its peak. Nova’s finances worsened after the government in June 2007 ordered it to suspend operations for violating rules on commercial transactions. It filed for bankruptcy protection in October that year.

http://www.bloomberg.com/apps/news?pid=20601101&sid=anM2GNuZ.3_4

In April 2007, the Supreme Court ruled the way the company calculated its cancellation policies was illegal and ordered Nova Corp. to repay about ¥310,000 to a Tokyo man who received no refund when he canceled his contract.

Faced with mounting debts, Sahashi in July 2007 allegedly diverted nearly ¥320 million from an employment benefit fund to the affiliate’s account.

The money was then supposedly used to reimburse students who had canceled their contracts. Nova officially declared bankruptcy in October 2007 and much of its operation was taken over by Nagoya-based G.Communications.

Sahashi argued he had the employees’ welfare in mind when he used the funds to pay the cancellation fees.

“Use of the money is not a violation of the funds’ purpose. The defendant thought it was money in an account with his name to be used for the welfare of the employees,” Sahashi’s lawyers said in a statement to the court. “Unless the cancellation fees were paid, the company was facing bankruptcy. Because there were no other funds, the money was used to avoid this worst possible case, and to maintain a minimal (amount) of welfare for the employees.”

Sahashi faces not only a lawsuit over the diversion of the employee benefit funds but also a suit by former students seeking ¥16 million in damages.

An attempt by [NUGW Tokyo Nambu sister union] the Osaka-based General Union, which represents many ex-Nova employees, to get prosecutors to indict Sahashi for nonpayment of wages failed last year. But in March, after the union pushed the local labor bureau to get prosecutors to probe their decision, auditors for the prosecutor’s office ruled the initial decision not to charge Sahashi was unjust.

The union hopes Sahashi will be tried separately for nonpayment of wages to 5,000 dismissed employees.

http://search.japantimes.co.jp/cgi-bin/nn20090602a1.html

According to the indictment, in July 2007, Sahashi conspired with a 50-year-old Nova executive in charge of finance to embezzle the reserve funds of a mutual aid organization for Nova Group employees chaired by Sahashi.

The money was transferred to a bank account of an affiliate company.

The prosecutors said that on the night before the transfer was made, Sahashi had convinced the executive, who was reluctant to take part in the scheme, that repaying the students was a necessity and urged him to spend as much money as possible.

http://www.yomiuri.co.jp/dy/national/20090602TDY01302.htm

The founder of Japan’s failed language school chain Nova went on trial on Monday charged with embezzlement over a scandal that left thousands of foreign teachers without jobs.

Nova, whose schools were once ubiquitous across Japanese cities, filed for bankruptcy protection in 2007 after the government ordered it to halt part of its operations over insufficient refunds for students.

Founder Nozomu Sahashi was then accused of siphoning off 320 million yen (S$4.8 million) from a benefits fund set up through employee contributions.

At his first court hearing, Sahashi, 57, admitted to using the funds but only said: ‘I cannot make a judgement on whether it should be considered embezzlement.’

His defence lawyer, according to a report by Jiji Press, said Sahashi had ‘no intention of embezzling money’ and had spent more than 1.1 billion yen of his private money to run the company.

Before its collapse, Nova had an estimated 400,000 students and 6,000 employees, some 4,500 of them foreigners. Many teachers were young people looking to spend a few years in Japan.

Some foreign teachers even offered to give lessons for food after Nova’s collapse left them unemployed in one of the world’s most expensive countries.

Sahashi established Nova in 1981, tapping into a Japanese passion for language study by setting up schools with trademark blue-and-yellow signs across major cities.

http://www.straitstimes.com/Breaking%2BNews/Asia/Story/STIStory_384477.html

The former president of English conversation school operator Nova Corp. admitted to embezzling employment benefit funds shortly before the company went bankrupt at his first court hearing Monday at the Osaka District Court.

But defense counsel for Nozomu Sahashi, 57, claimed his actions were in the interest of the employees and do not constitute the crime of professional embezzlement, pleading not guilty.

“It cannot be judged whether it is embezzlement or not,” Sahashi said.

According to the indictment, Sahashi diverted about 320 million yen from an employment benefit fund on July 20, 2007, transferring the money to the bank account of an affiliate company.

He is believed to have used it to reimburse tuition fees to those who canceled their contracts for language lessons.

“I apologize for causing students and employees great trouble,” Sahashi said at the beginning of the hearing.

Nova went bust in October 2007, leaving thousands of employees jobless and its students without refunds.

Nagoya-based G.communication Co. took over some of Nova’s operations in November that year.

Separate from the criminal case, former Nova students filed a lawsuit at the Osaka District Court seeking a total of 16 million yen in damages from Sahashi, the former management team and the audit corporation over their prepaid lesson fees.

Sahashi launched English conversation classes in Osaka in 1981 and set up Nova in 1990. His venture grew into Japan’s largest chain of English schools, with some 480,000 people taking its language lessons at its peak, before going bankrupt.

http://www.pddnet.com/news-ap-lead-ex-nova-president-admits-to-embezzling-but–053109/

[Former Nova President Nozomu] Sahashi is under indictment on charges of embezzlement in the conduct of business for transferring 320 million yen from the account of the employees’ mutual assistance association into another account in July 2007, exchanging the money for a check and placing the funds in an affiliate’s account.

A prosecutor said in the opening statement that Sahashi embezzled the funds because NOVA was pinched for money. “The defendant committed the crime after his firm became hard-pressed for cash and had difficulties repaying tuition fees to students who cancelled their contracts.”

The prosecutor said that on July 19, 2007, the day before the alleged crime, Sahashi instructed an accountant in the firm to use money from the association to refund tuition fees.

The accountant told him that the money in the association cannot be used that way. However, Sahashi said, “I know that, but we have no choice because we have no other funds,” according to the opening statement.

Moreover, apart from the 320 million yen, prosecutors accuse Sahashi of misappropriating approximately 30 million yen from the mutual assistance association between March 2004 and March 2007.

http://mdn.mainichi.jp/mdnnews/national/news/20090601p2a00m0na010000c.html

An independent panel formed by court-entrusted citizens has ruled unjust last year’s decision by prosecutors not to slap criminal charges on the failed English conversation school operator Nova Corp. and its former president for failing to pay salaries to foreign instructors and employees, the panel said Tuesday.

The decision was made by Osaka’s No. 2 committee for the inquest of prosecution, which urged the Osaka District Public Prosecutors Office to reopen investigations into Nova and former Nova President Nozomu Sahashi, 57.

The panel found that Nova and Sahashi were aware of a revenue shortfall, ran the language school chain on a hand-to-mouth basis, and continued to hire instructors and employees without any clear prospect of ensuring the source of their salaries.

The Ministry of Health, Labor and Welfare filed with the prosecutors in June 2008 an investigative report on Nova and Sahashi on suspicion of violating the labor standards law for failing to pay about 105 million yen in salaries to some 400 language instructors and employees in September and October 2007.

But in July 2008, the prosecutors decided against indicting Nova and Sahashi, saying they did not intentionally fail to pay the salaries.

Sahashi is currently on trial at the Osaka District Court on charges of professional embezzlement for allegedly diverting about 320 million yen from an employment benefit fund to reimburse tuition fees to people who canceled contracts for language courses.

An 11-member committee for the inquest of prosecution is established at all district courts across Japan to check decisions by prosecutors, who have a monopoly on the authority to indict.

Its main mission is to review prosecutors’ decisions not to indict, usually acting upon a complaint from crime victims or their relatives.

The panel’s decision is nonbinding, but prosecutors will usually launch re-investigations if the committee rules against their decision not to prosecute.

Nova went under in October 2007 and Nagoya-based G.communication Co. took over some of Nova’s operations in November that year.

Sahashi started running English conversation classes in Osaka in 1981 and set up Nova in 1990. His venture grew into the nation’s largest chain of English conversation schools before going bankrupt.

http://www.breitbart.com:80/article.php?id=D974C6JG0&show_article=1

‘All the schools are closed.’

That’s the text message I received on the morning of Oct. 26, 2007, from a fellow Nova teacher. I went to my school later that day to find the lights off, the doors locked and no one around. Like most of Nova Corp.’s hundreds of language centers, it was never to re-open. Japan’s largest conversation school chain filed for protection from creditors the same day. The company was declared legally bankrupt a month later.

In the period leading up to that fateful day, there had been plenty of signs that things weren’t right, says Briton Marc Davies, a former area manager. “The hardest part for me at first was dealing with a delayed paycheck. It was delayed by about four or five days in July. Then in August, because I was a senior supervisor, my pay was delayed again. The crunch really came in September when I was not paid at all. That was very scary. I was living off a credit card. I had no idea when and if I would get paid again.”

http://search.japantimes.co.jp/cgi-bin/fl20081111zg.html

Even though it has been a year since Nova applied for court protection under the Corporate Rehabilitation Law, the central government has done little to ensure the private language school industry improves its operations.

The failure of Nova, which was the largest language school in the nation, has sowed public distrust in the industry.

Moreover, many former Nova students have not been compensated for tuition fees paid in advance, even though the school’s operations have been taken over by Nagoya-based G.communication Co.

On Thursday, a group set up by former Nova students submitted a petition to Seiko Noda, state minister in charge of consumer affairs, requesting stronger measures to protect language school students.

“I’d like the authorities to investigate [the matter] in depth so similar problems don’t happen,” a 35-year-old female former Nova student said.

Although there are no regulations on the establishment of language schools, the law that covers such businesses was revised in 1999 to regulate them to some extent, allowing students to cancel contracts with the schools, for example.

Although Nova had many contract issues before it failed, the Economy, Trade and Industry Ministry supervising the law was slow to take punitive measures against Nova, such as banning it from entering into contracts with new students.

http://www.yomiuri.co.jp/dy/national/20081027TDY07301.htm