Foreign capital will profit from IRCJ

The new government-backed Industrial Revitalization Corporation of Japan (IRCJ), established to buy up banks' bad loans ostensibly to help rebuild failing companies, began its full-fledged operations on May 8.

The IRCJ funds provided for buying up bad loans is government-guaranteed up to 15-trillion yen (about 138 billion dollars) and the government would use tax money to absorb losses the corporation may incur when it dissolves itself in five years.

Banks will be absolved of all responsibility for their key task of helping failed companies rebuild themselves.

The responsibility of borrowers that receive help from the IRCJ will also be obscured. The burden will be shifted onto the workers through their dismissals and the abandonment of small- and medium-sized subcontractors as a result of corporate restructuring.

The Koizumi Cabinet has been pushing ahead with the write-off of bad loans under U.S. pressure. In fact, former members of U.S. investment funds, Ripplewood Holdings and Cerberus, are among IRCJ board members. The IRCJ's buying up of bad loans will most likely allow foreign investment funds to prey on bad loans held by Japan's major banks.

IRCJ president Saito Atsushi said, "None other than foreign capital offer concepts for industrial revitalization. The IRCJ welcomes them." He added that revitalization need speed and risk-taking." (end)