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A wall of silence on Sumitomo

As officials from Britain's Serious Fraud Office fly into Tokyo this week, the Great Sumitomo Copper debacle remains surrounded by a fog of unanswered questions.

It is understood the SFO will want to interview Sumitomo officials and the Japanese authorities but it was not clear whether they would meet Yasuo Hamanaka, the trader at the centre of the affair.

Their arrival coincided with news that gave a sombre new dimension to the investigations under way in the US, Japan and London. Police may reopen inquiries into the death in a house fire in Vermont five years ago of Paul Scully, a copper trader who was one of the first to complain to the authorities about Mr Yamanaka's activities.

Some reports suggest that Sumitomo's losses could more than double to $4bn as copper prices continue to tumble. But the essentials of what is known about the case so far could be written on the back of an envelope. Mr Yamanaka's deals were known to no one else, according to Sumitomo, except for a mysterious unnamed employee who quit the corporation eight years ago.

The company remains in sound shape, and is presently investigating the case, along with regulators in New York and London, and the Serious Fraud Office. This much was revealed in a press release put out by Sumitomo after close of trading in New York on 13 June. Since then almost nothing substantive has been added to the account.

How exactly did Mr Hamanaka conceal his losses? How did he fund them and, most important of all, who gained the money which he lost?

Sumitomo is not talking. British diplomats in Tokyo are not talking. The Japanese ministries, who take an overbearingly close interest in the conduct of their companies when times are good, insist that it is none of their business. Mr Hamanaka himself seems for the time being to have disappeared into the fugitive limbo inhabited by Lord Lucan, Elvis Presley and the Marie Celeste.

For enlightenment, it is natural to turn to the people who really know about these matters - the Japanese media. Japan's newspapers and TV news stations are the richest, most highly staffed, most widely circulated and watched in the world. But not one significant nugget of news or insight into the Sumitomo affair has been unearthed by Japanese journalists.

Apart from tracking the movements of Sumitomo's share price, lobbing anodyne questions at Sumitomo representatives at official press conferences, and running background features on the London Metal Exchange and the copper industry, they have been almost entirely passive. Last week the story - about the biggest loss of its kind, suffered by one of Japan's mightiest and best respected coporations - was buried beneath reports of a domestic air crash and the Prime Minister's visit to South Korea. For several days, the leads in the business pages were rehashes from the London and New York papers.

In Japan, every significant politician, every big company, every police department is host to a "kisha club" - a team of reporters who are assigned full-time to walk, talk, eat and drink with their news sources.

It is inconceivable that these men (they are overwhelmingly male) do not have an idea of what is going on inside Sumitomo. But the role of media in Japan is very different from that in the West, and nowhere is this seen more clearly than in business and financial coverage.

A press officer in a big Japanese corporation in Tokyo speaks with disbelief of the authority wielded by his colleagues. Official company announcements are revealed to the kisha club weeks in advance; then follows a period of intense horse-trading as the company press officers lobby for their announcement to be published more prominently than those of rival corporations.

After consultation with their editors, the reporters return with a proposal detailing the page, column and prominence to be given to each news release, which will be published almost verbatim. "If it doesn't appear exactly as agreed," says the press officer, "there are complaints and tantrums. It's unbelievable: these reporters have to apologise and give an account of themselves to the PRs."

Japanese reporters enjoy unprecedented access to corporate goings on. But they are tolerated only on condition that they never report anything remotely controversial or damaging.

As conspiracies go, it is an informal one, depending more on the instinctive caution and self-censorship of individual reporters and editors than on any conscious suppression of facts - Japanese reporters I spoke to last week seemed as puzzled as anyone about the dearth of investigation into Sumitomo.

But there's something fishy about it, all the same. When Daiwa Bank suffered a similar $1.1bn trading loss in New York last autumn, the story was tracked avidly in Japan. But the dodgy dealings in that case were carried out entirely overseas, by a long-term Japanese expatriate who had made America his home.

Yasuo Hamanaka, by contrast, was at the heart of the Tokyo financial establishment, and operated out of one of the corporate citadels of Japan Inc. Perhaps - it is no more than a suspicion - this accounts for the curious lethargy among the business media. Either way, when and if the truth finally comes out, it will be in spite, not because of, Japan News Inc.