The founder of Honda's son is arrested!
07-01-2003, 09:46 AM
#1
Thread Starter
The founder of Honda's son is arrested!
Son of Honda Founder
Arrested on Tax Charges
By TODD ZAUN
Staff Reporter of THE WALL STREET JOURNAL
TOKYO -- The son of the founder of Honda Motor Co. and a former Honda manager were arrested on suspicion of conspiring to evade corporate taxes at race-car-engine maker Mugen Co., a company that has had close ties to Japan's second-largest car maker.
Public prosecutors arrested Hirotoshi Honda, the president of Mugen and the son of the late Honda founder Soichiro Honda, along with Norio Hirokawa, Mugen's former auditor. Prosecutors suspect the two executives engineered a scheme to hide 3.8 billion yen ($31.7 million) in income and evade about 1 billion yen in corporate taxes at Mugen during the three years ended in October 2000.
The case could prove to be a major embarrassment to Honda, which was trying to help Mugen repair its tattered finances until shortly before the period of the alleged tax evasion. Mr. Hirokawa, 60 years old, was a longtime Honda finance official who was dispatched to Mugen in 1993 to help with financial planning. That same year, Honda took a 40% stake in Mugen.
Honda sold the stake back to Mugen in 1999 and now has no equity tie to the company, so Mugen's troubles are unlikely to hurt Honda financially. Yet the case could tarnish the Honda name in Japan, where the arrests were front-page news. The legend of how the late Mr. Honda built his company into a leading global car maker is as celebrated in Japan as the story of Henry Ford is in the U.S. The news comes at a time when Honda is struggling in its home market, where its sales in the first six months of the year sank 20% because of a lack of new models.
Prosecutors are investigating whether Messrs. Honda and Hirokawa conspired to reduce Mugen's reported income by making payments to lease equipment from a company they set up solely for that purpose, according to Japanese media reports. A spokesman for the Saitama District public prosecutors office, which is leading the inquiry, refused to give details of its investigation.
Hirotoshi Honda established Mugen in 1973 to build engines for race cars. The company later expanded with a line of parts for people who want to tune up their Honda cars, such as spoilers, mufflers and aluminum wheels. The company won a lucrative contract to build engines for Honda-sponsored Formula One race cars in the 1990s but fell on hard times when Honda decided to build its own engines beginning in 2000.
A spokesman for Mugen declined to comment Tuesday. Mr. Honda couldn't be reached for comment. Honda Motor spokesman Masaya Nagai said allegations of the illegal activity at Mugen were "surprising and regrettable" but declined to comment further, stressing that Honda Motor no longer has a stake in Mugen.
Arrested on Tax Charges
By TODD ZAUN
Staff Reporter of THE WALL STREET JOURNAL
TOKYO -- The son of the founder of Honda Motor Co. and a former Honda manager were arrested on suspicion of conspiring to evade corporate taxes at race-car-engine maker Mugen Co., a company that has had close ties to Japan's second-largest car maker.
Public prosecutors arrested Hirotoshi Honda, the president of Mugen and the son of the late Honda founder Soichiro Honda, along with Norio Hirokawa, Mugen's former auditor. Prosecutors suspect the two executives engineered a scheme to hide 3.8 billion yen ($31.7 million) in income and evade about 1 billion yen in corporate taxes at Mugen during the three years ended in October 2000.
The case could prove to be a major embarrassment to Honda, which was trying to help Mugen repair its tattered finances until shortly before the period of the alleged tax evasion. Mr. Hirokawa, 60 years old, was a longtime Honda finance official who was dispatched to Mugen in 1993 to help with financial planning. That same year, Honda took a 40% stake in Mugen.
Honda sold the stake back to Mugen in 1999 and now has no equity tie to the company, so Mugen's troubles are unlikely to hurt Honda financially. Yet the case could tarnish the Honda name in Japan, where the arrests were front-page news. The legend of how the late Mr. Honda built his company into a leading global car maker is as celebrated in Japan as the story of Henry Ford is in the U.S. The news comes at a time when Honda is struggling in its home market, where its sales in the first six months of the year sank 20% because of a lack of new models.
Prosecutors are investigating whether Messrs. Honda and Hirokawa conspired to reduce Mugen's reported income by making payments to lease equipment from a company they set up solely for that purpose, according to Japanese media reports. A spokesman for the Saitama District public prosecutors office, which is leading the inquiry, refused to give details of its investigation.
Hirotoshi Honda established Mugen in 1973 to build engines for race cars. The company later expanded with a line of parts for people who want to tune up their Honda cars, such as spoilers, mufflers and aluminum wheels. The company won a lucrative contract to build engines for Honda-sponsored Formula One race cars in the 1990s but fell on hard times when Honda decided to build its own engines beginning in 2000.
A spokesman for Mugen declined to comment Tuesday. Mr. Honda couldn't be reached for comment. Honda Motor spokesman Masaya Nagai said allegations of the illegal activity at Mugen were "surprising and regrettable" but declined to comment further, stressing that Honda Motor no longer has a stake in Mugen.
07-01-2003, 10:43 AM
#3
Wow. 
07-01-2003, 11:56 AM
#5
Registered User
This kind of news restores my faith in justice....I don't feel sorry for any millionaire who gets busted for doing illegal things. The money Mugen was saving by not paying taxes sure wasn't lowering the amount they were charging their customers.
07-01-2003, 12:46 PM
#6
Thread Starter
[QUOTE]Originally posted by Nobody
[B]This kind of news restores my faith in justice....I don't feel sorry for any millionaire who gets busted for doing illegal things.
[B]This kind of news restores my faith in justice....I don't feel sorry for any millionaire who gets busted for doing illegal things.
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07-01-2003, 05:28 PM
#8
Originally posted by S2kRob
This kind of justifies my opinion that Mugen stuff is so overpriced because the owner wants to get rich, not because it is worth it over other comparable products.
This kind of justifies my opinion that Mugen stuff is so overpriced because the owner wants to get rich, not because it is worth it over other comparable products.
and now he's 
and he's takin' Mugen down w/ him.
