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Cabinet Minister Resigns Over Firm’s Financial Troubles

August 14, 1985

TOKYO (AP) _ Prime Minister Yasuhiro Nakasone has accepted the resignation of Cabinet Minister Toshio Komoto, chief individual owner of the financially troubled Sanko Steamship Co., government officials said Wednesday.

In offering his resignation, Komoto assumed ″political responsibility″ for the problems of the world’s largest tanker firm, which applied Tuesday for protection so that it could reorganize under Japanese bankruptcy laws.

Komoto, who heads the governing Liberal Democratic Party’s fifth largest faction, was a minister without portfolio and served as acting prime minister during Nakasone’s recent trip to Europe. Komoto was considered one of Nakasone’s chief rivals in the 1982 elections for the party’s president.

Nakasone named Takao Fujinami as Komoto’s successor as state minister and chief of the Okinawa Development Agency, officials said.

Fujinami, 54, a member of the House of Representatives, previously served as parliamentary vice minister for the Science and Technology Agency and the Environmental Agency.

To handle external economic affairs which Komoto had been in charge of, Nakasone named Ippei Kaneko, director-general of the Economic Planning Agency.

Komoto stepped down 11 years ago from the presidency of Sanko, which now faces debts of an estimated $2.19 billion.

Sanko’s application for legal protection from its creditors was moved Wednesday from Kobe to the Tokyo District Court for the convenience of creditors based in the capital, said a Sanko spokesman, who asked not to be identified.

Under the Corporate Rehabilitation Law, the court is expected soon to safeguard Sanko’s assets of $288 million and appoint a receiver to negotiate reconstruction with its three main creditors, he said.

The three main backers are Daiwa Bank, Tokai Bank and the Long-Term Credit Bank of Japan.

Japanese bankers remained tight-lipped on the effects of the virtual bankruptcy.

″The biggest bankruptcy in Japan is potentially a big loss for some Japanese banks, but they can survive it,″ said a chief executive of a major foreign bank in Tokyo, who refused to be identified by name or organization.

″Maybe Japan Inc. is not quite as strong as it used to be, and Japanese banks will have to be more cautious about whom they loan money to in the future,″ he added.

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