Bank Officials Admit Loose Loan Policy
TOKYO (AP) _ A 61-year-old restaurateur under arrest and reportedly insolvent tricked officials of a top Japanese bank into making her $1.8 billion in loans, including $440 million still outstanding, the bank conceded Friday.
Yo Kurosawa, president of the Industrial Bank of Japan, said Nui Onoue used fake deposit certificates as collateral for a portion of the massive loans she took out. The bank is Japan’s top long-term credit bank.
The admissions were the latest in the odd scandal embroiling Japan’s financial community.
Miss Onoue, once known as Japan’s biggest individual investor, reportedly obtained more than $2 billion in loans from various institutions and used the money to pay off stock market losses.
Bewildered legislators repeatedly asked Kurosawa how Industrial Bank could loan so much money to an individual without looking into her plans for the money and her business conditions.
Outstanding loans from the bank and its related lending institutions to Ms. Onoue peaked at $1.8 billion last year, Kurosawa told a special parliamentary committee investigating Japan’s recent financial scandals. They have yet to collect $440 million, he said.
Kurosawa said the bank trusted the deposit certificates issued by major banks as well as tax certificates she submitted. After her arrest, the bank discovered the tax certificates also were fake.
″Again and again, she took the bond certificates (used as collateral) and returned with the fake ones,″ Kurosawa said. ″The last one she took didn’t even come back. We were fooled.″
He said the bank’s loan policy for other clients was very strict, but did not explain why it was so loose for Ms. Onoue.
Ms. Onoue and a former branch manager of Toyo Shinyo Kinko, an Osaka-based credit association, were arrested last month in an alleged scam to forge deposit certificates.
Ms. Onoue reportedly used the fake certificates as collateral to obtain almost $2.6 billion in loans from more than 10 financial institutions, including the Industrial Bank of Japan and Fuji Bank.
Last week, a credit research firm reported that she was insolvent, with debts of more than $3 billion accumulated in part through allegedly fraudulent loans, when a branch of Dai-Ichi Kangyo Bank in western Japan refused to honor two personal checks amounting to ″billions of yen″ from her.
The financial problems of Ms. Onoue stem in part from last year’s sharp drop in stock prices, which also led to other business scandals in recent weeks.
At least 21 major brokerages, including Nomura Securities Co. and Nikko Securities Co., paid nearly $1.3 billion in compensation for trading losses to more than 600 selected clients, mostly during the 1990 bear market when stock prices dropped about 40 percent.
On Thursday, former Nomura Chairman Setsuya Tabuchi and former Nikko President Takuya Iwasaki denied in testimony before the parliamentary committee that their companies manipulated the price of stocks sold to a gang boss, and suggested that their clients and the government bore some blame for the recent stock scandals.
Opposition parties reportedly demanded that the committee summon Tabuchi again for further testimony, along with several other Nomura officials.
Fuji Bank President Toru Hashimoto told the committee Friday that his bank loaned $146 million to Ms. Onoue, by allowing her replace her bond certificates with 15 fake deposit receipts.
The Industrial Bank of Japan’s Kurosawa said he met with Ms. Onoue several times, including a private visit to her restaurant. He said she once was the largest single stockholder in the Industrial Bank of Japan when she held at least 2.7 million shares of its stock.