Photo/Illutration An H.I.S. office in Tokyo’s Shinjuku Ward in May (Asahi Shimbun file photo)

The Japan Tourism Agency is considering filing criminal complaints against three companies accused of illegally obtaining government subsidies through the Go To Travel tourism-promotion program.

The companies will also be banned from the state-sponsored tourism campaign, which is expected to resume next year.

“The illicit receipt of the subsidies should never be tolerated,” tourism minister Tetsuo Saito said at a Dec. 28 news conference. “We will cooperate with investigative authorities and continue to get to the bottom of the matter.”

The three companies include two subsidiaries of major travel agency H.I.S. Co.: Tokyo-based Miki Tourist Co. and Osaka-based Japan Holiday Travel Co.

The third company is Tokyo hotel operator JHAT Co.

The now-suspended Go To Travel program was designed to promote domestic travel to help the tourism industry survive the COVID-19 pandemic.

Participating companies can offer discounts to customers and receive state subsidies in return.

An internal investigation by an H.I.S. panel found the companies illicitly received up to 680 million yen ($5.9 million) worth of the subsidies by creating fictitious accommodation contracts.

According to the panel, Miki Tourist made accommodation contracts with JHAT for 80 employees to each stay for 60 nights, or 4,800 nights in total. However, the employees only stayed for 114 of the nights.

The government paid 40.8 million yen in subsidies to JHAT based on those contracts, including the fake ones, the panel said.

JHAT also asked Japan Holiday Travel to organize business training trips to hotels run by JHAT.

Japan Holiday Travel sold reservations to companies introduced by JHAT for a total of 55,053 overnight stays.

But based on questionnaires conducted by the Go To Travel project office, many of the guests did not actually spend the night at the hotels.

Japan Holiday Travel illicitly received up to 642.49 million yen in subsidies through this arrangement, according to the panel report.

The Japan Tourism Agency will ask the three companies to return the money that they were not entitled to.

The panel said H.I.S. was not directly involved in the shady business, but the agency reprimanded the parent company, saying, “It lacked proper governance over its subsidiaries.”

According to the government agency, illicit receipts of Go To Travel subsidies have led to eight criminal investigations.

The agency obtained information about the latest case in December 2020, an official said.

“We have never had such a complicated and calculated case before,” the official said. “It was difficult to prove that guests did not actually spend nights at hotels. And interviews with people tied to this case were also delayed.”

To prevent a recurrence, the tourism agency will strengthen the checking process and increase the number of people involved in screening applications for the subsidies.

The official said the agency has already omitted business trips from the Go To Travel discounts, and has limited the discount-eligible stays to seven consecutive nights.

“It will be highly unlikely for guests to stay at hotels for dozens of nights,” the official said.

H.I.S. on Dec. 28 said it will slash the salary of Chairman and CEO Hideo Sawada by 75 percent for three months. The salaries of two executive directors, Tatsuya Nakamori and Masayuki Oda, will be cut by 50 percent over three months.

The president of Miki Tourist will be dismissed while the Japan Holiday Travel president will be demoted to a board director.

“We humbly accept the reprimand and will make improvements as much as possible,” Sawada said at an online news conference.

(This article was written by Sho Hatsumi and Shinya Takagi.)

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