 Arrest of former UFJ Bank executives shows more than bankers' crime The Tokyo District Public Prosecutors Office on December 1 arrested former UFJ Bank vice president and two other former executives on charges of organized obstruction of Financial Services Agency inspections by concealing data on major bad loans. The three bank executives are being held on criminal charges for violating the Banking Law. Prosecutors say they removed documents placed in more than a hundred boxes and 30,000 data files concerning more than 20 major bad loans and concealed them from FSA inspectors in August 2003. Apparently, they tried to make their bad loans look smaller lest their large clients rated by the FSA as "possible failures." Akahata of December 2 said that the arrest of the bank's former vice president means that public prosecutors regarded the UFJB's act as organized and intentional as evidenced in the tampered minutes of the management meetings. Akahata also stated that the incident is more than just a bankers' crime. It expressed the view that the leniency of the financial administration over major banks' bad loans, a product of their excessive loans during the bubble economy should also be called into question. The Ministry of Finance supervising financial institutions virtually did nothing concerning bad loans in the hands of major banks. Former UFJB senior managing director, one of the arrested, was a liaison between the bank and the MOF. Under Takenaka Heizo, former minister in charge of economic and fiscal policy, disposal of bad loans was accelerated, under the introduced American banking standards. Under this policy, small and medium-sized financial institutions were sorted for selection, and even major banks have to pay greater sums to prepare for the failures of bad loans, which often caused more deficits. The UFJB acted criminally in an attempt to avoid such consequences. Referring to many recent scandals involving large corporations, including falsified stock reports and concealing unfavorable test data, Akahata said that the American economic system in which higher stock prices justify anything has undermined morals of corporations that are public instruments for society. Akahata stated that administrative authorities have colluded in this situation. (end) |