Japan Bank punishes 98 over scandal

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The Independent Online
THE BANK of Japan yesterday disciplined 98 staff in an attempt to recover public trust and close the book on the worst financial scandal in its history.

The punishments were meted out following a two-month internal investigation sparked by the arrest of a senior BoJ official accused of giving out confidential information in exchange for lavish entertainment, mainly by private banks.

The official, Yasuyuki Yoshizawa, the then head of the capital markets division, was fired after being indicted two weeks ago on charges of accepting bribes of about 4.3m from the Industrial Bank of Japan (IBJ) and Sanwa Bank over four years from May 1993.

Yasuo Matsushita, governor of the BoJ, resigned last month to take responsibility for the scandal.

Among those punished yesterday were two executive directors and three advisers to the governor. The five will give up 20 per cent of their pay for one to five months.

The BoJ's new governor, Masaru Hayami, his deputy governors and four other executive directors also decided to give up 20 per cent of one month's salary "to show regret and determination to restore the bank's credibility", the BoJ added in a statement.

The investigation asked employees to volunteer information on contacts over the past five years, focusing on illegal acts as well as the frequency and manner of contacts.

The investigation did not find employees broke the law, but it revealed that some officials leaked confidential information with the approval of Mr Yoshizawa.

None of the BoJ officials investigated pressed financial firms to entertain them or forced private firms to pay for wining and the dining, it said. They also were not given special favours, such as discounts on golf course memberships.

But almost all received some entertainment, with some agreeing the entertainment was excessive.

"There is a need to establish a new style on how BOJ staff come in contact with financial firms and the markets, as Japan is about to go through a major revolution in its financial and asset markets," the bank said. "We would like to take this opportunity to remind all of our employees thoroughly about this."

A senior bank official told reporters that the internal investigation showed there had been no institutionalised leakage of sensitive information by central bank officials.

The bank began the internal investigation of about 600 management staff in February. Japanese media reports say staff used their own slang to describe entertaining by private firms. A "splash" involved a 20,000 dinner while a "plunge" could mean a 100,000 dinner.

The scandal has also led to a clean-up of ethics among private banks. Asahi Bank said yesterday it would cut the salaries of its chairman and president by 30 per cent for three months to take responsibility for the bank's involvement in the scandal.

Sanwa Bank, Sumitomo Bank and the Industrial Bank of Japan have already announced cuts in the salaries of their chairmen, presidents and other executives.

The Ministry of Finance has also been caught up in a similar scandal. Earlier this year, two officials were arrested on suspicion of receiving bribes from big banks in exchange for confidential information.