Honda website
Honda website

JULY 2, 2003

Honda steps down at Mugen

Hirotoshi Honda has stepped down as president of Mugen after being arrested on suspicion of a massive tax evasion. Honda (61) is accused of dodging $8.3m in corporate taxes by hiding $25m of income in a separate company and creating false accounts to cover the money.

Honda and Mugen's auditor, Norio Hirokawa, allegedly doctored the books for three years between 1997 and 2000. Hirokawa was also arrested.

The Honda Motor Company, which was founded by Hirotoshi's father Soichiro, did hold a 40% stake in Mugen until 1999 when the shares were returned to Hirotoshi Honda.

Honda Motor said that the company was "very surprised" at the arrests but said in a statement that it had been aware that Mugen was under investigation.

In a separate case on Monday in Tokyo Hirotoshi Honda was ordered to pay $14.8m to an automotive parts supplier.

Honda was six when his father set up the Honda Motor Company. After he graduated from Nihon University in 1965 he started building his own racing cars in workshops behind the family home, but it was not until 1972 that he established Mugen with Masao Kimura, an engineer with experience at Honda R&D and in the Honda Racing team. The plan was to develop technology to be used on Honda road cars and develop racing engines for sale.

In 1986 Honda commissioned Mugen to build an engine for the new Formula 3000 and in 1989 Mugen arrived in European F3000, winning seven of the 10 races and taking Jean Alesi to the title. The 1990 season would be even better with F3 titles in Britain, France and Japan and both the Japanese and European F3000 championships as well. The only obvious step was Formula 1. In 1989 Mugen built its first F1 engine - a 3.5-litre V8 - but this was not raced.

In 1991, however, Honda gave Mugen the job of preparing its V10 engines for the Tyrrell team and after Honda withdrew from F1 in 1992 it handed over its engine programs to Mugen and the company entered F1 with Footwork. In 1994 Mugen switched to Team Lotus but then went on to Ligier for 1995. The following year the Benetton-lookalike Ligier-Mugen won the Monaco Grand Prix with Olivier Panis driving.

Mugen switched to Jordan in 1997 and in 1998 there was a second victory with Damon Hill's victory at Spa. The 1999 season resulted in further success with Heinz-Harald Frentzen winning twice but when the Honda Motor Company announced that it would be supplying factory engines to Jordan and British American Racing in 2001 Mugen was forced to withdraw from F1.