Finance Minister, Bank Heads Announce Resignation in Clean Sweep
TOKYO (AP) _ Finance Minister Ryutaro Hashimoto offered to resign Thursday and top executives of three major banks quit in what was viewed as the government’s final attempt to purge itself of lingering financial scandals.
Taizo Hashida, chairman of Fuji Bank, the world’s third-largest, stepped down over a scandal involving phony deposit certificates.
Tokai Bank Vice Chairman Eikichi Arai also resigned and Kyowa Saitama Bank announced two directors were stepping down. Both banks have disclosed they issued fake deposit certificates.
Although Japan’s financial markets have long since shaken off the effects of the scandals, which began becoming public 3 1/2 months ago, the governing Liberal Democratic Party has had to endure embarrassing recriminations in Parliament.
In the traditional manner of containing scandal by taking ultimate responsibility at the top, Hashimoto’s proffered resignation was an attempt to clear the air for the governing party, which will form a new government by month’s end.
It was also seen as Hashimoto’s effort to save his own political future by preserving his honor with a minimum of bother, since Prime Minister Toshiki Kaifu’s Cabinet is to be dissolved in a few weeks anyway.
Kaifu put the resignation on hold until later this month to allow Hashimoto to attend World Bank and Group of Seven meetings in Bangkok, Thailand, in mid- October, in which aid to the Soviet Union is expected to be a major topic.
The 54-year-old Hashimoto, considered a likely future prime minister, had faced mounting pressure to step down because of allegations the Finance Ministry was negligent in overseeing the securities and banking industry.
″My sense is that Hashimoto and his people are trying to close the loop now and say he’s done his bit, he’s made his sacrifice,″ said Kenneth Courtis, chief economist with Deutsche Bank in Tokyo. ″They can do that if the other resignations are out of the way.
″For Hashimoto, a man who will one day be prime minister, this is just the end of act one,″ he said.
Fuji Bank’s Tashida said his resignation had nothing to do with Hashimoto’s. But Courtis and other analysts said it was highly likely all the resignations were jointly orchestrated by the governing party, possibly through threats of prosecution.
″It looks as if someone coordinated it,″ said Gregory Clark, an economist at Sophia University. The bank executives knew ″this could have landed them in court. But this will probably take care of that.″
Hashimoto’s resignation was timed to occur after Parliament passed legislation Thursday morning prohibiting brokerages from their widespread practice of compensating favored clients for investment losses.
″I should have exercised better direction, so I am taking top responsibility by submitting my resignation,″ Hashimoto, his face wan, his eyes glistening, told a packed news conference.
″We are now able to take a first step to prevent the reoccurrence of financial scandals,″ he said.
Hashimoto said he stepped down partly because his aide, Toyoki Kobayashi, was linked to a deal said to involve the fake deposit certificates issued by a Fuji Bank branch.
The fake certificates, in all worth $1.98 billion, were used as collateral for loans.
Few financial insiders, however, expect Thursday’s legislation or the expected approval next year of a new securities watchdog agency to change much in Japan’s cozy, club-like financial industry, where collusive practices are believed to occur with the tacit consent of the Finance Ministry.