EXCLUSIVE: Kimono Rental Firm Fell behind on Social Security Premiums

June 24, 2018

Yokohama- Harenohi, a kimono rental service company involved in a loan fraud case, has fallen behind in social security premium payments for employees for a long time, Jiji Press learned Sunday.

The Kanagawa prefectural police department suspects that Yoichiro Shinozaki, former president of the Yokohama, Kanagawa Prefecture-based company, may have led efforts to window-dress a financial statement of the company in order to defraud a bank of loans in such a difficult financial situation, investigative sources said.

Shinozaki, 55, was arrested Saturday on fraud charges. Harenohi messed up this year's Coming-of-Age Day ceremonies in and around Tokyo as it failed to provide young women with formal attire.

According to the sources, Harenohi has rapidly expanded its business operations since 2015, opening outlets in Tokyo as well as Fukuoka, Ibaraki and Chiba prefectures. But massive store opening costs dented its earnings, the sources said.

The company fell behind on employee social security premiums for a long time, but showed itself to be profitable by padding sales by about 50 million yen in the accounting term through September 2015, the sources said.

In September 2016, it swindled a bank in Kanagawa, south of Tokyo, out of 35 million yen in loans by using the falsified financial statement. The bank learned in the following month of the social security premium payments in arrears, a discovery that eroded trust in the company.

Harenohi reported in November 2016 a large loss in its financial statement for the term to September in the year.

As the company was unable to receive new loans from banks, its management conditions worsened further, according to the sources.

Harenohi suddenly closed its stores in Yokohama and Hachioji, western Tokyo, on this year's Coming-of-Age day on Jan. 8, leaving numerous young women without kimono to wear in ceremonies, provoking public outcry. Jiji Press