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Major Bank Says it Gave Unusual Treatment to Client Charged With Fraud

September 5, 1991

TOKYO (AP) _ One of Japan’s leading banks said Thursday it gave special personal treatment to a reportedly insolvent restaurateur who owes the bank about $440 million and has been charged with fraud.

Yo Kurosawa, president of the Industrial Bank of Japan, acknowledged that 61-year-old Nui Onoue received extraordinary consideration as one of the bank’s most favored customers. He said a senior official at its Osaka branch accompanied her on a private religious trip to India last summer.

″We decided it was not outside the range of our service to her as a large individual client,″ said Kurosawa. ″But now we regret that happened because it caused unnecessary concern about their relationship.″

The bank president appeared before a special parliamentary committee investigating a string of scandals in Japan’s beleaguered financial industry, including loans made to Ms. Onoue that allegedly were secured with forged certificates of deposit.

Ms. Onoue has told Japanese reporters that she entered a Buddhist sect about 20 years ago and later received a divine message to begin trading in stock.

Ms. Onoue, a restaurant owner who once considered the nation’s largest individual investor, bought shares when she felt inspired and purchased stock in many heavy-hitting financial institutions, including the Industrial Bank of Japan.

At one point, she was the bank’s largest individual shareholder, Kurosawa said. But he denied that was the reason for the bank’s generous loans to her.

Lawmakers Thursday speculated Ms. Onoue may have been linked to Japan’s yakuza gangsters, an allegation she has denied. Asked if any signs of a gangster connection had been discovered, Kurosawa said the bank investigated but could not gather enough evidence to reach such a conclusion.

Kurosawa and presidents of two other major banks involved in various scandals apologized before the parliamentary committee for their banks’ loose loan policies.

The Industrial Bank of Japan’s loans to Ms. Onoue peaked at 240 billion yen, worth about $1.8 billion, last year. The bank and its related lending institutions still have 60 billion yen, or $440 million, to collect.

Kurosawa said part of it can be recovered by liquidating Ms. Onoue’s real estate holdings secured by the bank, estimated to be worth about $147 million.

Lawmakers repeatedly asked Kurosawa why such loans were extended to Ms. Onoue without checking thoroughly into her background or ability to repay. He responded with repeated apologies but no explanations.

″This is the first time we were forced into such a fraud case, and we are determined not to repeat the same mistake again,″ said Kurosawa. ″We thought we did enough to examine her credibility.″

But he acknowledged that his bank did not carefully check two tax reports she submitted that subsequently proved to be fake.

In related news, Tokyo district prosecutors said they arrested on Thursday Kazuo Toyama, a former employee of Kyowa Saitama Bank, on suspicion of issuing forged deposit certificates to help clients obtain 4 billion yen in loans from other financial institutions.

Also, a private survey company said Thursday that the number of television commercials for brokerages has fallen dramatically because of the scandals and the sharp drop in value of shares on the stock market.

Japan’s top brokerages have admitted they made large payments to favored clients to compensate them for trading losses.