Photo/Illutration A sign pointing to a place providing support for people who want to apply for the government’s COVID-19 pandemic subsidies for small businesses (Toshio Tada)

A staggering 22,500 people who received government subsidies for struggling small businesses during the pandemic vowed to voluntarily return the funds, yet about a third have not done so.

The government has been scurrying to claw back lost funds that went to the wrong people since cases of benefit fraud began to pop up one after another.

Only 15,400 have returned the benefit payments as of June 16, according to the Small and Medium Enterprise Agency, which deals with the subsidies.

Officials think that in many of these 7,000 cases where the subsidy recipients have yet to hand back the money, fraudsters had likely asked them to give their names so they could file fraudulent applications, just like in the recent case where a family in Mie Prefecture is alleged to have helped illegally bring in subsidies worth roughly 960 million yen ($7.2 million).

“I believe that there are some cases in which people find it hard to return the subsidies because they paid fees to the people who applied for the subsidies on their behalf, or because they have spent the subsidies,” said Katsuhiko Sakai, a professor of tax law at Chuo Law School.

The National Consumer Affairs Center of Japan said it received around 1,000 requests for advice about the fraudulent receipt of COVID-19 subsidies over two years up until the end of May.

In more than half of these cases, about 590, those seeking the advice admitted they had fraudulently received the subsidies.

Some said that they wanted to return the subsidies but could not for one reason or another.

The center also said it has received around 1,060 requests for advice since May 2020 where people said they had received suspicious offers regarding subsidy applications.

Officials believe they were asked to provide their names so fraudsters could use them to illegally file applications to get the subsidies.

May 2020 is when the application period for the subsidies started.

Around 70 percent of those who sought advice from these 1,060 cases were people in their 20s or younger.

Around half were company employees and 20 percent were students. Some 10 percent had no occupation.

Of the 1,060 requests for advice, 300 were made in July 2020.

That was the month when police identified many instances where subsidies had been obtained through fraud.

Officials believe that people who sought advice from the center that month had become worried after watching news coverage about these cases of subsidy fraud.

Of the approximate 590 cases in which advice seekers admitted to the center that they had fraudulently received the subsidies, about 310 expressed the desire to return the money.

In some cases, they said they wanted to know how they could return the subsidies, while at other times they said they wanted to give the money back but were unable to do so. Some said they could not return it because they no longer had the full amount after paying fees to the people who applied for the subsidies on their behalf.

The Small and Medium Enterprise Agency said it will not sue people who fraudulently received the subsidies if they voluntarily return them.

But an agency official cautioned that they must still follow through on that promise.

“Just saying that they would voluntarily return the subsidies doesn’t exempt them from the responsibility to return them,” the official said. “We could consult with the police if some people involved in these cases actually have bad intentions.”

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