Mototaka Ikawa, the former chairman of the Daio paper empire, was indicted Dec. 13 for aggravated breach of trust in connection with 3.2 billion yen ($41 million) in loans from four subsidiaries between July and September.
Ikawa was also rearrested the same day on suspicion of borrowing, without collateral, 2.33 billion yen from three other subsidiaries. They loaned money to Ikawa on eight separate occasions between March and September. Ikawa served as head of all three companies.
Ikawa, 47, faces possible charges in connection with a total of 5.53 billion yen in loans that he has yet to repay.
Ikawa has told investigators he squandered most of the money on high-stakes gambling in casinos in Macao and Singapore, according to sources.
The loans provided by the three subsidiaries were made after Ikawa's father, Takao, a former Daio Paper Corp. adviser, cautioned him in March about taking out such large sums.
According to sources, Mototaka Ikawa then asked other board members of the three subsidiaries not to inform his father about the loans.
Prosecutors have established that Ikawa began gambling at the casinos from 2007. Until about 2009, he used his own money, but with losses piling up, Ikawa turned to acquaintances and companies headed by relatives for loans.
That escalated to Ikawa asking Daio Paper subsidiaries to transfer funds directly into his own account or to the accounts of companies operating the casinos where he had huge losses.
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