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Minister denies shady dealings in outsourcing aid program for virus-hit businesses

Industry minister Hiroshi Kajiyama on Tuesday rejected criticism of the government's coronavirus-relief program, amid allegations of shady cash flow related to the recommissioning of the program from an organization to a major advertising agency at lower cost.
Service Design Engineering Council in Tokyo won the bid for the government's cash benefit program for small and medium-sized companies hit by the novel coronavirus at 76.9 billion yen ($712 million) and then recommissioned the work to handle applications from businesses to ad giant Dentsu Inc. for 2 billion yen less.
Dentsu then consigned the work to temporary staffing service Pasona Group Inc and Transcosmos Inc, which provides integrated marketing, outsourcing and call center services.
Dentsu told Kyodo News it is carrying out the program in line with a government manual and there is no problem with its implementation.
The board of the council consists of eight part-time members, including those linked to Dentsu, Pasona and Transcosmos. It is widely believed that the three companies were involved in the establishment of the organization in 2016.
The minister of economy, trade and industry told a press conference that there was nothing problematic about the execution of the program, saying "a variety of tasks were involved and they were divided" between the organization and the companies.
The industry ministry has said that, of the 2 billion yen, 1.56 billion yen was set aside to cover bank transfer fees for cash benefits and 120 million yen was for labor costs at the organization.
Under the relief program, the government grants up to 2 million yen each to small and medium-sized companies that have seen revenue declines of 50 percent or more on a year-on-year basis, and up to 100,000 yen to individual business operators, including freelancers.
The council was consigned 14 projects by the industry ministry worth a total of 157.6 billion yen between fiscal 2016 and fiscal 2020 that started in April.
According to documents presented by the ministry to Diet members, nine of the projects were then recommissioned to Dentsu and other companies.
The council had 21 employees as of Monday, including people seconded from the three companies, according to the government.
Opposition parties have been critical of the government, with Akira Koike, second-in-command of the Japanese Communist Party, saying on Monday, "It will be an extremely serious problem if a mysterious organization is ripping off the cash benefits," as he called for a thorough probe into the matter.
Eiichi Kasahara, chairman of the council, has said he will step down from the post when his term ends at its general meeting next Monday.


© KYODO
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