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Racketeering scandal hits Nomura profits

Nomura, the scandal-ridden Japanese securities house, admitted yesterday its profits had been hit hard since it emerged two months ago that it had been paying money into a racketeering organisation, known as a sokaiya, to stop its annual meeting from being disrupted.

The company yesterday announced that fees from underwriting stocks and bonds in Japan soared by a third in the year to end-March, but reported an overall net loss of 271bn (pounds 1.32bn) due to the bail out of a real- estate lending subsidiary.

While conceding that the sokaiya scandal would hurt profits this year, Nomura predicted it would remain in the black even if customers continued to desert and if it was ordered by the regulatory authorities to shut down trading on its own account for several months.

In March alone, when the scandal broke, profits were halved, said Takamichi Arata, director of Nomura's finance department. "This year will be difficult. But by cutting costs, we'll probably manage to stay in the black." Earlier this week every top executive resigned from Nomura.