Shares in functional drink giant Yakult Honsha on Monday dropped sharply after a local weekend report that the Japanese beverage maker had paid off a suspected racketeer, reports Dow Jones.
According to the news report although Yakult has denied it had exaggerated advertising expenses to pay a total of about Y90 million (€0.7m) to the suspected racketeer, investors sold off the stock amid increasing nervousness over corporate irregularities in Japan and overseas.
The latest report follows a similar racketeer pay-off scandal report in 2000, which Yakult also denied, as well as the indictment of the company's former vice president in 1999 on several charges related to the purchase of highly- speculative Princeton bonds, the report continues.
The Mainichi Shimbun reported on Sunday that Yakult is suspected of paying the money over five years up until 2000 to a company executive, who is believed to have played the role of a "sokaiya" corporate racketeer, to prevent disruption at its general shareholders' meetings.
The report said Yakult booked about Y150 million in payments to an advertising agency, run by an acquaintance of the executive, to place ads on the backs of expressway toll receipts between 1996 and 2000. But only Y60.6 million reached an affiliate of the expressway operator, while the rest - about Y89.4 million - was allegedly given to the executive or the advertising agency, the report said.