Failed English conversation school chain Nova Corp. and its sacked president Nozomu Sahashi are poised to face charges for not paying wages to about 400 employees, according to the Osaka Labor Bureau.

Bureau officials are set to send documents to prosecutors accusing the company and its former president of failing to pay about 105 million yen to around 400 staff, mainly foreign language instructors and Japanese support staff.

Excluding cases involving unpaid overtime or severance pay, the amount the bureau accuses Nova of failing to pay is unsurpassed in an instance where criminal responsibility has been pursued.

Sahashi, 56, denies deliberately intending to withhold wages, but labor bureau officials strongly believe he continued to force the conversation school chain to operate when there was no realistic chance of being able to pay employees. Including sums due for assistance after Nova collapsed in October last year, it is estimated that Nova owed employees 4.1 billion yen, and the figure would be greater if severance pay were included.

The Japan Labor Health and Welfare Organization is a government-run body that pays workers up to 80 percent of their wages (up to a limit of 2.96 million yen a month) if their employer goes bankrupt and fails to pay them what they are owed. The organization said that as of the end of May, there have been requests for payouts from 6,921 former Nova employees to the sum of 2.91 billion yen. Payouts of 2.85 billion yen have been made to 6,751 former Nova workers.

http://mdn.mainichi.jp/national/news/20080624p2a00m0na004000c.html

Police on Tuesday arrested the founder of Japanese language school Nova on embezzlement allegations, capping the fall of a businessman whose company had hundreds of thousands of students.

Police in the western city of Osaka arrested Nozomu Sahashi, the founder of what was Japan’s largest chain of language schools until last year, on suspicion of embezzlement, a police spokesman said, declining further comment.

Sahashi was accused of misusing 320 million yen ($2.97 million) from a benefits fund set up through employee contributions.

Sahashi admitted using the funds but denied any wrongdoing, saying the money went to refund students who had cancelled their contracts.

“I would like employees to know that I used the money for the company,” Sahashi said in a statement released Tuesday morning. “I did not spend a single penny of the company’s funds for my private purposes.”

Nova’s collapse began last year when the government ordered it to halt part of its operations as punishment for insufficiently refunding students.

The controversy triggered a flood of students cancelling their own lessons, leading the company to file for bankruptcy protection.

“We hope the arrest will lead to clarifying the cause of the bankruptcy,” lawyers in charge of the company’s accounting in the bankruptcy said in a statement.

“We will study the possibility of filing civil cases against former president Sahashi,” they said.

Sahashi established Nova in 1981, tapping into a Japanese passion for language study by setting up schools with trademark blue-and-yellow signs across major cities.

Before its collapse, Nova had an estimated 400,000 students and 6,000 employees, some 4,500 of them foreigners. Many teachers were young people looking to spend a few years in Japan.

Some foreign teachers offered to give lessons for food after Nova’s collapse left them unemployed in one of the world’s most expensive countries.

A number of Nova schools have been taken over by G.communication Co., which is based in the central city of Nagoya.

http://newsinfo.inquirer.net/breakingnews/world/view/20080624-144559/Police-arrest-founder-of-Japans-top-language-school

The labor ministry’s regional bureau in Osaka is planning to send information to prosecutors possibly later this week on Nozomu Sahashi, former president of Nova Corp., on suspicion of nonpayment of wages to language instructors, sources said Monday.

The Osaka Prefectural Police are separately planning to launch investigations to build a criminal case against Sahashi, 56, for alleged embezzlement of fringe benefit provisions for employees at what was once the largest English-language school chain in Japan, the sources said.

According to the sources, the allegations by the labor bureau concern a total of around �100 million that should have been paid last September and October to around 400 instructors and staff members nationwide who worked for now-bankrupt Nova.

The amount represents one of the largest cases of nonpayment of regular wages ever.

However, the allegations constitute only a part of wage nonpayment at Nova. During the two-month period, it is known that around 8,000 employees did not receive salary payments totaling �1.8 billion.

The unpaid wages are thought to be as high as �4.1 billion in all if the period after October, when Nova went bust, is included.

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