FUKUSHIMA (TR) – Earlier this year, it emerged that Iwaki Shinkin Bank had for decades brokered fraudulent loans totaling around 27.9 billion yen.
At a press conference last month, the scandal continued to unfold with revelations that the bank provided approximately 1 billion yen of its illegally obtained funds to so-called “anti-social forces,” reports TV Asahi (Nov. 1).
On October 31, a press conference was held by a special investigation committee consisting of Iwaki Shinkin Bank’s current top executives and external lawyers.
“We deeply apologize for the considerable inconvenience and concern caused,” said Shigeru Kanari, the chairman of Iwaki Shinkin Bank.
In May, the third-party committee revealed that fraudulent loans totaling 24.7 billion yen had occurred over a 20-year period.
To broker the fraudulent loans, the bank misused seals bearing the same surnames as its customers to create unauthorized accounts. These accounts were used for fictitious loans to cover client deficits.
“This scandal is a clear violation of the law, and the executives should be dismissed,” said third-party committee attorney Yasuhiro Kaneda.
In the latest developments, the third-party committee said that funds from the fraudulent loans were paid to organized crime to assist in covering the misappropriations.
“Our conclusion is that a significant portion of the funds were used to pay unjust claims from so-called anti-social forces, or those who should be considered anti-social,” said special investigation committee attorney Kentaro Sadahiro.
The expression “anti-social forces” is a euphemism for yakuza groups, or criminal syndicates.
“Exploiting their weaknesses”
In the 1990s, financial institutions found themselves in a situation where they could not sever their ties with organized crime, including corporate racketeers who disrupted shareholder meetings in pursuit of money and goods.
“Some of our executives at the time had relationships with these organized crime groups, sharing meals and drinks with them, providing them with loans, and ultimately exploiting their weaknesses to make various demands,” said Sadahiro.
In the case of Iwaki Shinkumi Bank the criminal element went by the pseudonym “Sigma.”
“Sigma repeatedly made unreasonable demands on the union, and there are audio recordings of his statements implying ties to organized crime,” said Sadahiro.
Sigma also assured, “I’ll settle the matter. You pay me.”
“Hush money”
In 1994, a political group repeatedly held street demonstrations at the home of the bank’s chairman. Sigma volunteered to act as a mediator to stop the demonstrations. After the bank paid Sigma approximately 350 million yen, the group continued to demand payments as “hush money.”
As previously reported, former chairman Jiro Ejiri played a leading role in the coverup of the fraudulent loans. He also acknowledged paying Sigma.
“My impression is that the amount of money I paid during my term as chairman was around 1 billion yen,” he said.
Ejiri explained that the payments were made over a period of approximately 13 years. The special investigation committee noted that “this explanation is not unreasonable.” Since no other uses for the funds were identified, it was determined that all of the 850 million to 1 billion yen previously considered unaccounted for went to organized crime.
According to the investigation report, Ejiri and other executives at the time dined and drank with Sigma on numerous occasions. They also traveled overseas multiple times.
“Extremely regrettable”
The results of the aforementioned third-party committee’s investigation announced in May included testimony that an employee had smashed a computer with a hammer to hide evidence. However, this was apparently a lie.
“He contacted us himself and said, ‘No, actually, that’s not true,'” Sadahiro said. “I consulted with [former managing director] Tsuboi in the bank’s conference room. He said, ‘Okay, I’ll keep it.’ So I had entrusted it to Tsuboi.”
Not only did they openly lie to the third-party committee, but the executives also concealed the fact that they actually had the computer.
“Tsuboi explained that he put it in a paper bag and threw it away with the trash on collection day around early December of last year,” Sadahiro said.
Also on October 31, the Financial Services Agency issued its second business improvement order this year to Iwaki Shinkumi Bank, which included a partial suspension of operations. “This is an unacceptable situation for a financial institution. It is extremely regrettable,” the agency said.
