Japan Press Weekly

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2009 March 25 - 31 [SCANDAL]

Vice finance minister quits over ‘insider’ stock trading

Vice Finance Minister Hirata Koichi resigned from his post on March 26 after taking responsibility for his alleged shady stock sales in off-market trading.

Prime Minister Aso Taro accepted his resignation.

Earlier in the day, Daimon Mikishi of the Japanese Communist Party had demanded that Hirata resign as the vice finance minister at the House of Councilors Financial Affairs Committee meeting.

The vice minister sold a massive amount of stock, 1.2 million shares, of the company Chiyoda Ute Co. based in Yokkaichi in Mie Prefecture, specializing in the production of gypsum boards. Chiyoda Ute is listed on the Japan Association of Securities Dealers Automated Quotations (JASDAQ) market.

He sold them for 550 yen per share, totaling 616 million yen, a price nearly double its market value, to Zero System, a petroleum product sales company. Hirata is the largest shareholder of Zero System.

Apparently, he got 290 million yen more than what he could get through ordinary market dealings. Chiyoda Ute’s share price closed at 290 yen per share on February 27.

Under the government’s physical code, incumbent ministers and vice ministers are urged to refrain from stock dealing. Specifically, it is very serious for a vice finance minister assigned to safeguarding fair trade to be involved in such dubious dealings.

JCP Daimon stated that the JCP cannot allow the committee to discuss changing tax laws aimed at mass tax increases when the vice minister’s stock dealing is damaging the ministry stance on fair trading.

Finance Minister Yosano Kaoru answered that he will sincerely deal with the matter by complying with the code.