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Official of Japanese Bank Arrested

March 11, 1998

TOKYO (AP) _ A widening financial scandal reached Japan’s central bank today when prosecutors arrested a senior official of the Bank of Japan for allegedly taking bribes from two leading Japanese banks.

Yasuyuki Yoshizawa, 42, the chief of the Capital Markets Division at the BOJ is suspected of accepting more than $31,500 in the form of lavish dinners and other entertainment from the Industrial Bank of Japan and Sanwa Bank.

In return, Yoshizawa allegedly provided the banks with information about the central bank’s market operations, the Tokyo District Prosecutors Office said.

Earlier in the day, the Tokyo District Prosecutors Office raided the BOJ building, launching the first-ever criminal investigation involving Japan’s central bank.

BOJ officials were not immediately available for comment.

The scandal centers on the chronic collusion between bureaucrats and the businesses they regulate. Today’s moves follow the arrests of several other government officials, including two Finance Ministry bureaucrats.

Yoshizawa is accused of using his influence as a senior BOJ official to obtain money from the two banks. He is suspected of having started accepting bribes in 1993.

Yoshizawa also allegedly leaked the BOJ’s quarterly ``tankan″ survey of business sentiment, which is closely watched by financial institutions as an indicator of central bank monetary policy.

Several other big-name banks are suspected of involvement in the scandal, and the amount Yoshizawa allegedly accepted in kickbacks could surpass $78,000, NHK said.

Yoshizawa was in charge of monitoring liquidity in the money market, while supervising other central bank officials in charge of overseeing commercial banks, Kyodo reported.

Kyodo said he allegedly leaked central bank operations such as buying and selling of short-term government securities in exchange for the bribes.

On Monday, Bank of Japan Gov. Yasuo Matsushita told Parliament that the central bank had begun an internal probe of 600 employees in managerial posts to determine whether they had been wined and dined by financial institutions anytime over the past five years.

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