Maybe shihan Shioda looked away, distracted by Osensei's wife, and/or sneezed and didn't actually see what happened. Would he admit to Osensei that he "missed" it, I think not.
Such an arguement is nonsense. If six men were about to shoot O'Sensei as part of a demonstration, would you "miss it"?
Plus, according to the story, they did it twice. So, if you missed it the first time, don't you think that you might try really hard not to "be distracted," so you would surely witness it when it happened the second time?
I think the source has to be given some serious consideration in this case. That is, he is probably a high-ranking martial artist, he is a Japanese living in Japan, and he was there. Can any one of you on this thread make this claim?
Japanese are not known to carry out scams in an effort to promote martial arts. If such a scam were ever uncovered, they would become totally discredited. No high-level martial artist would risk it.
Connecting O'Sensei with such a scam is entirely unthinkable.
Ultimately, someone may be able to debunk this story. But if that's the case, I would seriously doubt that O'Sensei had anything to do with it.
Now, if anyone doesn't believe this story, do something constructive -- debunk it with some facts!