The Japanese Ministry of Defense is preparing to take disciplinary action against numerous members of the Japan Maritime Self-Defense Force (JMSDF), including Chief of Staff Admiral Akira Saito, over an illicit payment scheme involving submarine maintenance contracts.
The decision follows revelations that Kawasaki Heavy Industries (KHI) created slush funds through fictitious transactions and used the money to provide unauthorized goods to submarine crew members.
According to interviews with officials cited in Japanese media on July 24, the Ministry will announce the results of its internal investigation on July 30, alongside the final report from the Defense Inspector General’s Office. The report is expected to confirm that some JMSDF personnel accepted personal goods in violation of regulations. Admiral Saito, the service’s highest-ranking officer, is reportedly being held accountable for supervisory lapses.
The misconduct was first uncovered during a tax investigation by the Osaka Regional Taxation Bureau. A preliminary report issued by the Ministry in December 2023 revealed that Kawasaki Heavy Industries fabricated orders for materials such as packaging supplies to create illicit funds. These funds were then used in part to purchase private items for submarine crew members.
The Ministry noted that the fraudulent practices may have begun as far back as 40 years ago, with the total amount involved in the past six years alone reaching approximately 1.7 billion yen (around $11 million USD).
Kawasaki Heavy Industries and Mitsubishi Heavy Industries are the JMSDF’s primary submarine builders, both based in Kobe. In addition to manufacturing, the companies are also responsible for the JMSDF’s triennial submarine inspections and overhauls. The Ministry’s investigation found that Kawasaki employees manipulated procurement records during this process to generate unauthorized financial reserves.
The submarine fleet, comprising 25 vessels, is a critical pillar of Japan’s naval defense strategy.