OSAKA (TR) – Kizuna Holdings, an Osaka City-based welfare business operator, has been stripped of its licenses after fraudulently receiving approximately 15 billion yen in government subsidies through an employment scheme that exploited disabled individuals, reports the Yomiuri Shimbun (Mar. 28).
On March 27, the Osaka City revoked the designations of four “Type A continuous employment support” facilities operated by Kizuna Holdings (Kizuna HD) after uncovering the massive fraud. The city is currently demanding the return of about 11 billion yen.
At the center of the scandal is a scheme the company called the “36-Month Project.” Starting in 2020, Kizuna HD hired disabled facility users as operational staff, only to dismiss them after six months so they would revert to regular “user” status. They were then repeatedly hired and fired in a cycle designed to artificially inflate “employment retention” figures and rake in massive government payouts.
“We cannot evaluate their system as one built to support employment retention,” Shinichi Inoue, Director of the city’s Operations Guidance Division, told reporters on Friday.
Audit
During an audit launched in August last year, city officials also exposed the reality of the company’s touted “online employment” system. Investigators gathered testimonies revealing that many remote users were simply “watching videos at home.”
As the audit progressed, the company scrambled to cover its tracks. Management abruptly ended the remote work option, ordering all users to commute to the physical offices. The sudden change led to severe overcrowding — with lines spilling out of restrooms — and caused immense distress among the disabled workers.
One woman in her 20s, who joined the facility because remote work accommodated her adjustment disorder, developed a sleep disorder due to the stress of the sudden commute. “I just wanted to rebuild my life and reintegrate into society,” she lamented.
The situation worsened after media reports exposed the suspected fraud in November. In February, the facilities abruptly switched their work assignments to “cleaning only” under the pretext of protecting jobs. Workers who had previously done data entry or art creation were forced into physical labor.
“I was told it was ‘cleaning or nothing,’ even though I suffer from dizziness and physical labor is difficult,” one user reported to a local labor union.
Kizuna Holdings fraudulently received 15 billion yen in government subsidies (X)“Grab subsidy money”
The founder of Kizuna HD stepped down as director in December 2024. In a 2021 book, he claimed the company’s mission was to help disabled people “shine” by treating their traits as “talents.” However, former employees told reporters the project was nothing more than a “business designed to grab subsidy money.”
City officials also noted that the facilities routinely violated welfare laws by exceeding their 20-person capacity limits and illegally leaking users’ personal information to the parent company.
Following the revocation of their licenses, Kizuna HD held a briefing for users and staff on March 27, abruptly announcing that all facilities will be shuttered by the end of April.
The sudden closure has sparked panic among the 334 disabled users and 1,006 operational staff currently registered at the facilities.
“I was suddenly told about the closure. I am panicking about where to go next,” a female user in her 30s said.
To mitigate the fallout, the city and the Ministry of Health, Labor and Welfare have established consultation desks to assist the disabled individuals who are suddenly losing their support networks and incomes.
AloJapan.com