Nova chief may face unpaid wages charge

OSAKA (Kyodo) 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.

During earlier questioning by the labor bureau, Sahashi insisted that he had made "maximum efforts" to resolve the wage nonpayment by providing his personal assets, according to the sources.

However, the labor bureau believes Sahashi bears criminal responsibility for the suspected violation of the Labor Standards Law, given that he continued to operate Nova even though he had no prospect of paying the wages for its workers, they said.

The bureau is not seeking to hold other executives liable because Sahashi was in full control of management, the sources said.

Nova faced a liquidity crunch after it was ordered to suspend part of its operations by the government in June 2007 for allegedly lying to prospective clients about tuition charges and also faced suits by clients seeking a refund of their tuition.