200 agents swoop on Nikko

The Japanese authorities raided Nikko Securities yesterday, completing a clean sweep of the country's Big Four stockbrokers in its clampdown on Tokyo's endemic financial corruption. Tom Stevenson, Financial Editor, reports on the latest developments.

Around 200 agents swooped on Nikko Securities in Tokyo yesterday in a high-profile raid that netted the last of Japan's Big Four securities houses in a spiralling illegal payments scandal. Prosecutors said that Nikko was suspected of paying 14m (pounds 71,000) to Ruichi Koike, an alleged extortionist, in return for a promise not to disrupt its annual meetings.

Nikko said it was "deeply sorry" for the raid and promised to co-operate with the authorities. A government source said the firm had admitted to some of the suspected deals with Mr Koike, who is already in custody after repeated dealings with Nikko's rivals.

The raid follows the announcement on Wednesday that Daiwa's president, chairman and five other top executives would resign to take responsibility for their firm's part in the affair.

There had been rumours in the Japanese press that Nikko would be the next broker in the spotlight, even though the company denied the reports.

All of Tokyo's top securities houses now stand accused of paying backhanders to so-called sokaiya gangsters to prevent them unveiling dubious business practices and breaking up annual meetings.

Payments to the gangsters have been illegal since 1983 but the deep-seated corruption in Japanese business circles has made it virtually impossible for any single firm to break ranks with its rivals and stand up to the extortionists.

In an earlier scandal, all four of the largest firms, as well as many of their smaller rivals, were found in 1991 to have illegally compensated their favoured clients.