'No apology' in Daiwa scandal

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The Independent Online

New York

On Wednesday, Japan's Minister of Finance, Masayoshi Takemura, got on the telephone with his American counterpart, US Treasury Secretary, Robert Rubin, to discuss the Daiwa scandal. That we know. But when it comes to what was actually said there are two rather distinct versions: a Tokyo one and a Washington one.

The Washington Script: Mr Takemura may not have grovelled, but on the issue of why six weeks were allowed to pass from the moment his ministry first learned of Daiwa's $1.1 billion bond trading loss until the same information was given to the US authorities, he was allegedly deeply contrite.

Mr Takemura "acknowledged the ministry's failure to inform the US authorites promptly" that a single trader at Daiwa's New York branch, Toshihide Iguchi had stolen more than a $1bn to cover up losses racked up over 11 years and deceived American regulators, a US Treasury reported.

To Washington reporters that sounded much like a formal apology. Moreover, Mr Takemura, they were told, had, almost like a child asking for forgiveness, vowed that his ministry would mend its ways. "He promised it would not happen again", Mr Rubin's press office stated.

The Tokyo script: "Mr Takemura did not apologise to Mr Rubin," retorted Eisuke Sakakibara, a spokesman for the Japanese Finance Ministry in a press conference in Tokyo on Thursday. Instead, he said, the minister had simply "acknowledged that there was a partial failure of communication."

Indeed, said Mr Sakakibara, for its part the Japanese Ministry still does not believe it has anything to apologise for. "I don't think there was anything improper in what we have done." The Tokyo press corps was furthermore informed that there had been "no mistakes".

The ministry had first admitted last Monday that it got wind of the loss on 8 September, when Daiwa Bank approached a senior ministry official, Yoshimasa Nishimura. Mr Nishimura apparently told the Bank to investigate further and get back to him when it had confirmation. It did so five weeks later and it was another week before the US was told.

Mr Nishimura suggested that cultural differences were partly to blame for the dispute. Japanese officials tend to bestow trust in bankers and like to get all the details of an affair before going public. The Americans believe in pouncing on a fire at the first sign of smoke.

Cultural differences may also have played a role in the different interpretations of the call. More likely, it was more a case of each side massaging the news for their respective audiences. Whether there was really some Japanese scraping and bowing or just non-committal acknowledgement is something only for Messrs Takemura and Rubin to know.