Oct. 11, 2009 (The Yomiuri Shimbun) -- A Board of Audit inspection has discovered that 26 prefectural governments misused a total of more than 2.5 billion yen in central government subsidies this year, it has been learned.

The board inspected the 26 prefectural governments over subsidies provided by the Construction and Transport Ministry and the Agriculture, Forestry and Fisheries Ministry. Seven prefectures, including Chiba and Ibaraki prefectures, placed fictitious orders with companies that had cozy ties with the prefectural governments, and the companies kept the money in slush funds for the governments at their request.

Last year, the board pointed out that 12 prefectural governments, including the Tokyo metropolitan government and Aichi and Iwate prefectures, misused a total of about 1.1 billion yen over the five years to fiscal 2006.

This year, the board probed how the 26 prefectural governments used subsidies provided by ministries during the five years to fiscal 2007, and found that all the prefectural governments had misused the funds by allowing companies to deliver items that differed from those specified on order forms, or using part of the subsidies to pay temporary employees.

According to the board, Chiba prefectural government was the worst offender among the 26 prefectural governments.

In September, the Chiba prefectural government held an in-house inspection and found that when expenses associated with the prefecture's unsubsidized public works were included, the prefectural government misused a total of 3 billion yen, the prefectural government said.

Of this total, the prefecture misused about 800 million yen in subsidies provided by the construction ministry and the agriculture ministry.

The board plans to demand that the prefecture return about 800 million yen that came from the state coffers.

The board also found that seven prefectures--Chiba, Ehime, Fukui, Ibaraki, Kumamoto, Okinawa and Tokushima--handed part of the subsidies to certain companies and created slush funds in the bank accounts of the companies by pretending the prefectural governments had purchased items from the firms.

The funds were used when the prefectural governments purchased items that differed from the ones fictitiously ordered.

The board pointed out the maliciousness of the act, saying slush funds could be used for embezzlement purposes by local government officials.

The board also inspected ordinance-designated cities and found that Osaka and Chiba had misused subsidies.