Key Facts
• July 30, 2025: Ministry of Defense released final report on submarine repair fraud.
• 93 Maritime Self-Defense Force members disciplined, including Chief of Staff Satoshi Saito.
• Saito received one-month pay cut (10% of salary) for supervisory negligence.
• Fraud uncovered during Osaka Tax Bureau investigation into Kawasaki Heavy Industries (KHI).
• KHI funneled funds through fake transactions, providing personal items to submarine crew.
• 40-year-long fraud generated at least 1.7 billion yen from 2018 to 2023.
• 13 crew members received goods worth 1.4 million yen, including game consoles and watches.
• Similar misconduct found at Mitsubishi Heavy Industries, Japan Marine United, and Sasebo Heavy Industries.
• Fraud involved inflated repair costs and unperformed tasks to fund personal item purchases.
• Ministry issued warnings to companies but avoided harsher penalties like blacklisting.
• Structural issues in procurement cited as root cause of prolonged misconduct.
• Disciplinary actions: 73 reprimands, 17 warnings, and potential further penalties for 13 individuals.
• Reforms include flexible procurement, compliance training, and structural changes to prevent fraud.
Summary
The Japanese Ministry of Defense has revealed a 40-year-long fraud involving submarine repair contracts, implicating 93 Maritime Self-Defense Force members. The scheme, uncovered by the Osaka Tax Bureau, involved Kawasaki Heavy Industries and other contractors creating slush funds through fake transactions. These funds, totaling 1.7 billion yen from 2018 to 2023, were used to provide personal items to submarine crew members. Disciplinary actions include pay cuts, reprimands, and warnings, with further penalties under consideration. The Ministry has pledged reforms, including procurement flexibility, compliance training, and structural changes, to address systemic issues and restore public trust.
