More arrests in Nomura scandal

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The Independent Online
Japanese prosecutors have arrested the gangster at the heart of the growing payoff scandal at Nomura Securities, the world's biggest brokerage, and raided the firm's head office in Tokyo.

As investigations into the giant firm widened yesterday, the authorities indicated there would be no let-up in the inquiries so that investors did not lose trust in Japan's stock markets.

Tadashi Ogawa, deputy finance minister, said: "We are very concerned about the fact that the problem of Nomura has caused a big loss of trust by investors in the stock markets.

"It is a grave blow against the markets, especially as the scandal involved a leading company like Nomura."

The Tokyo district prosecutors' office said Ryuichi Koike was arrested on suspicion of taking 50 million yen (pounds 283,000) in illegal payments from Nomura to stop him from disrupting the company's 1995 annual shareholders' meeting.

Koike's younger brother, a commercial property agent, was also arrested on suspicion of being an accomplice in the affair by allowing his company to be a front for payment of the money.

Earlier yesterday, about 50 investigators marched into Nomura's headquarters in their second raid on the head office since the scandal broke during an internal Nomura enquiry last March.

The mid-morning raid was interpreted by Japanese observers as an attempt by regulators to send a stern message to the financial community to clean up business ethics.

"The case casts doubt on corporate morality and has considerably damaged investors' trust in the securities market," said Seiroku Kajiyama, a government spokesman.

"There is a need for a full investigation and to develop measures to prevent a recurrence," he said.

The raid was a follow-up to the arrests on Wednesday of two former Nomura executives and a third senior Nomura official in a case that linked the firm to racketeers. The racketeers, known as "sokaiya", extort money from companies by threatening to disrupt shareholder meetings.

Those arrested included former Nomura managing directors Shimpei Matsuki and Nobutaka Fujikura, who resigned from their posts on 10 March after an internal Nomura probe found they made discretionary deals banned under Japanese law.

The third was Osamu Fujita, a general affairs officer in charge of shareholder meetings, who prosecutors allege made the payments under Fujikura's orders.