Finance ministry to punish Nomura and Dai-Ichi bank

Click to follow
The Independent Online
Japan's Ministry of Finance yesterday said it planned to take further action against Dai-Ichi Kangyo Bank and Nomura Securities within the next few days over their involvement in illegal pay-offs to a corporate racketeer. The pending punishment is viewed as an attempt to draw the line under a financial scandal that has rocked the Japanese business world and has caused a huge management shake-out at both finance houses.

Takeshi Komura, vice minister at the Ministry of Finance, said yesterday: "The ministry will impose punitive action on Dai-Ichi Kangyo Bank and Nomura Securities in the coming days for their involvement in illegal payoffs to sokaiya racketeers."

Dai-Ichi has also been ordered to pay a fine of 500,000 yen (pounds 2,600) by the Tokyo Summary Court. While the fine is small for Japan's fourth- largest bank, it's the maximum allowed under the law and this is only the second time the courts have fined a bank since the Second World War. The court found the bank falsified reports submitted during a ministry inspection in October 1994 to conceal loans to Ryuichi Koike, an alleged racketeer.

Mr Komura said the bank's attempt to evade an inspection by the Ministry of Finance "jeopardises trustworthiness in the banking sector and threatens inspections by the ministry, which are aimed at retaining the sound financial condition of banks."

The Ministry of Finance is expected to bar Dai-Ichi from extending new loans for a month. Prosecutors have already charged 11 former bank executives, including the Dai-Ichi's chairman Tadashi Okuda, all of whom could face up to six months in prison and a fine. The bank allegedly loaned more than pounds 160m to Ryuichi Koike, a corporate racketeer or sokaiya. He is also accused of extorting almost pounds 2m from Nomura, Japan's largest broking house. Koike was supposedly paid money in return for not disrupting annual meetings by revealing embarrassing secrets or allowing other sokaiya to do so.