Tokyo Prosecutors Arrest Seven in Credit Loan Scandal
TOKYO (AP) _ The former president of a bankrupt credit union and six other former executives were arrested Tuesday on suspicion of breach of trust in connection with an alleged loan swindle.
The Tokyo District Public Prosecutors Office arrested Sampachi Taido, 51, former president of the now-defunct Cosmo Credit Corp., a prosecution official said. Prosecutors also raided the homes and offices of Taido and the six others.
Among the others arrested was Joji Sato, a former acting president of Cosmo, and leading executives of loan-recipient companies affiliated with companies run by Taido’s relatives.
Taido was suspected of having authorized Cosmo to extend about 6.7 billion yen ($64.4 million) in loans without sufficient collateral to three firms in 1992 while he was president, news reports said.
The maximum penalty for breach of trust is five years in prison or a fine of 500,000 yen ($5,900).
Kyodo News quoted Taido as saying Tuesday, ``We will fight this improper arrest.″ He has told the news agency in previous interviews that he has done nothing illegal.
Cosmo Credit Corp., formerly the largest credit union in Tokyo and the fifth largest in Japan, suspended its operations in August after depositors rushed to withdraw their money following a newspaper report of its financial troubles.
Cosmo was taken over in late March by a special institution set up last year to handle the operations of two other failed credit unions.
The collapse of Japan’s economy in the late 1980s left the institution with about 160 billion yen ($1.63 billion) in bad loans, mostly in real estate, according to the Tokyo Metropolitan government.
Japan’s banking system has been reeling under the weight of an estimated 40 trillion yen ($384 billion) in bad loans.
Last June, presidents of two Tokyo credit unions were arrested in a loan scandal that brought down the institutions. Earlier this year, authorities in Osaka raided the defunct Kizu Credit Union, Japan’s largest, as well as the home of its former president.