Dai-Ichi board resigns over loans scandal

A mass resignation of main board directors was announced yesterday by Dai-Ichi Kangyo, the third-largest bank in Japan and the fifth-biggest in the world, over the scandal involving pounds 63m of loans made to Ryuichi Koike, an alleged corporate racketeer.

The resignations came as Tokyo police arrested four former Dai-Ichi Kangyo executives, bringing to eight the number of former and current employees who have been arrested in connection with the loans.

According to reports in Japan, the arrests involved two former vice-presidents and two former lower-ranking bank executives. The reports said one of those apprehended was Kenji Tanaka, now president of Jusco, a supermarket chain.

Mr Tanaka was a managing director at Dai-Ichi Kangyo from 1992 to 1995 when he headed the general affairs department. The other three arrested were reportedly Akira Kanazawa, a former vice-president of the bank, Tsuneo Uchida, a former vice-president, and Yasuyuki Terasawa, a former managing director who was responsible for screening loans.

The board of Dai-Ichi Kangyo is the second corporate board to resign en masse because of the scandal since 15 top-ranking executives of Nomura Securities stepped down in April.

President Katsuhiko Kondo, 59, and Tadashi Okuda, the 65-year-old chairman who last month said they would step down and stay on the board as advisers, will resign altogether from Dai-Ichi. The two vice- presidents who were to replace them, Ichiro Fujita, 58, and Yoshiharu Mani, 60, will also resign. Between April 1995 and March 1996, Mr Fujita was in charge of loan screening, an operation police are investigating for connections to Mr Koike.

Katsuyuki Sugita, 54, will take over as the bank's president at the annual shareholders' meeting on 27 June, when the current president and seven other top-ranking executives formally step down to take responsibility for the scandal.

Another 16 employees, including branch managers, department chiefs and auditors, also would resign, the bank said.

The bank said the new board of directors would be made up of Mr Sugita and 15 other junior executives. The bank has not yet appointed a new chairman. Those selected "were found not to be involved in the current scandal by an internal investigation," Mr Sugita said yesterday.

"Any change of leadership would be good for the bank at this point," said Nozomu Kunishige, an analyst at Lehman Brothers Japan. "They need people without the taint of the scandal."

The executives below board level who resigned were asked to do so because the internal investigation found evidence that loans may have been made toMr Koike, said Mr Sugita.