Former Nomura president arrested

The Nomura scandal took a further twist yesterday when Tokyo prosecutors arrested Hideo Sakamaki, who resigned as the broking company's president a couple of months ago, as part of the investigation of payoffs to a racketeer.

Mr Sakamaki, 61, was brought in for questioning about 49.7m (pounds 263,000) of hush money that Nomura allegedly paid to Ryuichi Koike, a reputed sokaiya, or corporate blackmailer. Hiroshi Mitsuzuka, Japan's finance minister, said. "The fact that the head [of Nomura] was suspected and arrested is very grave."

Forty investigators also raided Nomura's headquarters in Tokyo for the third time since Japan's biggest financial scandal in five years broke. The arrest is the latest sign that authorities doubt Nomura's explanation that only three lower-ranking employees knew about the hush money.

Asked if top executives knew of the payoffs, Junichi Ujiie, the new president, said: "I don't have the information to judge for myself at this time."

Mr Ujiie said he would now ask Mr Sakamaki to resign as an adviser to the brokerage, ending 39 years at the company. Police have not yet charged Mr Sakamaki.

Nomura suffered further financial fallout from the affair yesterday when six of the nine main Japanese electric power companies excluded it from underwriting their bond issues.