Big broker, three former executives plead guilty to illegal payoffs
TOKYO (AP) _ Japan’s largest brokerage and three former executives pleaded guilty Tuesday to illegally funneling profits to an accused corporate racketeer, acknowledging their part in a scandal that has rocked Japan’s financial industry.
Nomura Securities Co. and three of its top officials were charged with providing a total of $2.91 million in illegal profits to Ryuichi Koike, an accused racketeer.
The admission of guilt came at the first session of their trial in Tokyo District Court, a court official said. Nomura is the first of Japan’s major brokerages to go on trial in the scandal.
Nomura could face a maximum fine of $787,400. Former president Hikeo Sakamaki, 62, and former executives Shimpei Matsuki, 53, and Nobutaka Fujikura, 55, could be sentenced to up to one year in prison or fined up to $7,870.
Their trial will continue, with later testimony having a bearing on their sentences.
Tuesday’s court session came one day after Yamaichi Securities Co., another of Japan’s ``Big Four″ brokerages, collapsed under a burden of debts, slumping stock prices and the effect of scandals, including charges that it also paid off Koike.
Nomura was accused of paying Koike between January and June 1995 to ensure that its annual shareholder meetings went smoothly. The Nomura officials are accused of making illegal payoffs through a real estate firm run by Koike’s relatives in Tokyo.
Prosecutors say people like Koike buy a nominal amount of stock in target companies to gain entry to shareholders meetings and then threaten to bring up embarrassing issues such as executive sex scandals or losses at subsidiaries if not paid off in advance. The tactic has been effective in Japan, where appearances are considered important. Making such payments is illegal.
Matsuki, who was responsible for Nomura’s equity business, and Fujikura, responsible for general management affairs, both resigned over the scandal in March. Sakamaki, who was arrested on May 30, first met with Koike in May 1992, the prosecution said.
Koike has been charged with illegally receiving profits from Nomura and three other big brokerages _ Nikko Securities Co., Daiwa Securities Co. and Yamaichi, in addition to Dai-Ichi Kangyo Bank, a major Japanese commercial bank. He is to go on trial in the same court Dec. 2.
Koike allegedly used questionable loans from Dai-Ichi Kangyo to buy 300,000 shares of each of the ``Big Four″ brokerages in 1989.
In a widening of the payoff scandal, three more officials of top Japanese companies _ leading real estate company Mitsubishi Estate Co. and Japan’s largest electric machinery maker Hitachi Ltd. _ were arrested Tuesday on suspicion of illegally paying off another racketeer group, police said.
Two Mitsubishi Estate officials were suspected of paying $25,000 and a Hitachi official was suspected of paying nearly $23,600 to reputed racketeer Terubo Tei, police said.
Three Mitsubishi Motors officials already have been arrested for allegedly funneling $72,500 to Tei.
Japan’s Parliament now is discussing stronger penalties for both accused racketeers and corporate officials in cases of illegal payoffs.