Finance minister warns Nomura of 'severe measures'
Saturday 08 March 1997
The warning came a day after Nomura said it suspected that two of its directors in Japan had paid millions of yen of illegal trading profits to a gangster, and amid strong rumours that Hideo Sakamaki, president of Nomura, would resign soon over the affair.
"In order to prevent a similar case, we must take strict measures," said Mr Mitsuzuka. The company could have its operations suspended for up to six months, according to an official at the finance ministry's securities bureau. He added that Nomura could also be fined if the trades breached criminal codes.
Nomura was punished by the Finance Ministry back in 1991 after it discovered that the company had compensated large clients for losses on investments to the tune of Y128bn (pounds 623m) at the expense of foreign clients. The company was forced to suspend stock trading at 87 branches for four weeks.
News of the latest scandal led Prime Minister Ryutaro Hashimoto, who is pushing through plans to deregulate Japan's financial markets, to ask yesterday: "Why do these things keep happening?" However, he failed to mention that he resigned as Finance Minister in 1991 after the ministry had consistently failed to prevent financial scandals.
Speculation was rife in Tokyo yesterday Mr Sakamaki will step down to take responsibility for the scandal. He would be the second Nomura president to quit in the space of seven years: his predecessor resigned after a similar incident in 1990.
A spokesman for Nomura said yesterday that he knew nothing about Mr Sakamaki's intentions, and said he could not make any further comment about the president's position or about the exact amount of money that is alleged to have been siphoned out of Nomura by the two directors.
Fallout from the scandal continued to undermine Nomura's share price on an otherwise generally good day of trading on Japan's stock market. Nomura's shares fell 3 per cent to Y1,530 in Tokyo, in contrast to the overall gains of almost 1 per registered by the Nikkei 225 index.
According to press reports in Japan, the two directors at Nomura illegally dealt in stocks from the company's own account and transferred the profits to a property company. The unnamed company had close family links with a sokaiya - a racketeer who extorts money from companies.
"We are profoundly sorry for engaging in transactions which should not have taken place," said Atsushi Saito, a vice president of Nomura. According to one report, five illegal "discretionary trades" were carried out by the two directors since 1993.
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