There must be a mistake. Japanese banks window dressing?
yomiuri.co.jp
LTCB said to have submitted false data to ministry, BOJ
Yomiuri Shimbun
The Long-Term Credit Bank of Japan, suspected to have window-dressed
past financial settlements, had been submitting fabricated board meeting
records and other internal documents during inspections conducted by the
Finance Ministry and the Bank of Japan since 1996, it was learned
Saturday.
Informed sources said the bank's management had fabricated documents to
embellish managerial situations of its affiliated nonbanks.
Investigating authorities, including the special investigation unit of the
Tokyo District Public Prosecutors Office and the Securities and Exchange
Surveillance Commission, have already begun questioning parties involved in
the incidents, which may reveal LTCB had been window-dressing its
operations, the sources said.
Industry sources say filing such false reports to the Finance Ministry may
be a violation of the Banking Law.
LTCB was placed under temporary state control last October and the bank
was found to have concealed enormous nonperforming loans by
transferring them to affiliated firms.
The prosecutors office, the commission and the Metropolitan Police
Department have been investigating allegations of LTCB window-dressing.
According to the sources, the LTCB underwent one routine inspection by
the Finance Ministry in April 1996 and another by the Bank of Japan in
May 1998. Both times, it submitted excerpts from executive board meetings
and documents relating to its settlements of accounts.
According to the sources, however, the general planning division prior to
these inspections had asked each of the bank's divisions whether they
required modifications to documents scheduled for submission. The general
planning division was responsible for negotiations between the ministry and
the central bank.
Upon receiving advice from each division, the general planning division
fabricated journals from the management panel, which consisted of board
members, and the managing directors' panel, an advisory organ to the LTCB
president. Internal documents used during panel meetings were also
falsified before submission to the ministry and the central bank.
Sections fabricated mainly involved the management status of affiliated
nonbanks, including NED, based in Shibuya Ward, Tokyo, and LTCB
measures to support such firms.
Some original journals were destroyed, while others containing excerpts
that were supposed to be submitted to the institutions were concealed in
LTCB buildings, the sources said.
Fabricated journals and other documents submitted after 1995 were
confirmed, but the sources said such incidents began more than 10 years
ago.
According to the sources, the LTCB is currently suspected to have also
submitted false documents during a Finance Ministry inspection in January
1992 and a Bank of Japan inspection in February 1994.
Following the end of the bubble economy, managements of nonbanks
affiliated with the LTCB were faced with failed real estate investments.
As of last March, the LTCB had extended about 704.6 billion yen to NED
and two other affiliated nonbanks.
As this problem seemed likely to affect LTCB's management, the managerial
status of the nonbanks was a crucial target of inspections conducted by
the central bank and ministry.
The LTCB is believed to have fabricated documents of its affiliates, as its
corrupt management structure would have immediately surfaced if the
central bank and the ministry had discovered the management of the
nonbanks had been in disarray, according to the sources.
Several suspicions of LTCB windowdressing have surfaced to date,
including the following:
* During the settlement term ending March 1998, LTCB included false
management information in its portfolio report submitted to the Finance
Ministry.
* In the same settlement term, LTCB illegally payed 7.1 billion yen in
dividends to its shareholders.
Article 24 of the Banking Law requires banks to report information
concerning business and asset situations to the state and submit documents
if necessary.
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