OSAKA, June 1 (Kyodo) — (EDS: CLARIFYING 2ND GRAF, ADDING INFO)
The former president of English conversation school operator Nova Corp. admitted to embezzling employment benefit funds shortly before the company went bankrupt at his first court hearing Monday at the Osaka District Court.
But defense counsel for Nozomu Sahashi, 57, claimed his actions were in the interest of the employees and do not constitute the crime of professional embezzlement, pleading not guilty.
"It cannot be judged whether it is embezzlement or not," Sahashi said.
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According to the indictment, Sahashi diverted about 320 million yen from an employment benefit fund on July 20, 2007, transferring the money to the bank account of an affiliate company.
He is believed to have used it to reimburse tuition fees to those who canceled their contracts for language lessons.
"I apologize for causing students and employees great trouble," Sahashi said at the beginning of the hearing.
Nova went bust in October 2007, leaving thousands of employees jobless and its students without refunds.
Nagoya-based G.communication Co. took over some of Nova's operations in November that year.
Separate from the criminal case, former Nova students filed a lawsuit at the Osaka District Court seeking a total of 16 million yen in damages from Sahashi, the former management team and the audit corporation over their prepaid lesson fees.
Sahashi launched English conversation classes in Osaka in 1981 and set up Nova in 1990. His venture grew into Japan's largest chain of English schools, with some 480,000 people taking its language lessons at its peak, before going bankrupt.