Mizuho chairman, others resign over mob loansOctober 28, 2013 @ 6:21 am
TOKYO (AP) - Mizuho Financial Group said Monday the chairman of its banking business and two other top executives will resign over the Japanese lender's failure to crack down on loans to organized crime.
Mizuho said its president, Yasuhiro Sato, will give up six months of pay but remain at his post. The bank also is appointing Tatsuo Kainaka, a former prosecutor and Supreme Court judge with a reputation for toughness, to be its chief compliance officer.
Sato and other top executives bowed deeply in apology _ such gestures are a familiar sight in corporate Japan.
Besides the exit of Mizuho Bank chairman Takashi Tsukamoto, Mizuho's top compliance officer and its risk management director will resign Nov. 1. Dozens of Mizuho employees face salary cuts. Tsukamoto is also chairman of Mizuho Financial Group and retained that position.
"We caused a great deal of trouble and I want to express my deepest apologies," Sato said. "I am aware there are various opinions about this, but this is what was decided in this case," Sato said when asked if the penalties were too weak.
An outside panel reported Monday that its probe found Mizuho lax in cleaning up more than 200 million yen ($2 million) in lending, mostly auto loans, to clients associated with "anti-social" elements, a byword for organized crime.
Mizuho, Japan's No. 2 bank by assets, failed to do what was expected in reducing and preventing mob-related loans, the panel said, though it concluded the bank had not engaged in a deliberate cover-up.
The panel headed by former judge Hideki Nakagome, who also led an investigation into accounting fraud at camera and medical equipment maker Olympus Corp., called the lending "captive loans" acquired when Mizuho bought consumer finance company Orient Corp.
Senior Mizuho executives neglected to clean up the loans after discovering them in early 2011. Soon after, Mizuho's management became preoccupied with ATM malfunctions triggered by an influx of donations for victims of the 2011 tsunami disaster.
Mizuho presented a plan for an overhaul to the Financial Services Agency, which last month demanded that the bank devise a strategy for "improvements" to its lending business.
The bank has pledged to end the loans, step up anti-mob screening of incoming business, tighten corporate governance and improve internal awareness about preventing dealings with those linked to organized crime.
The troubles at Mizuho underscore the difficulties financial companies confront in avoiding dealings with Japanese gangs, known as "yakuza." They are entrenched in many areas of the economy despite efforts to freeze them out of the financial system.
But the panel also faulted Mizuho's corporate governance, a perennial problem highlighted by a stream of scandals over negligence, fraud and other troubles at some of Japan's most elite companies.
In a governance report issued July 1, Mizuho outlined a code of conduct that abjures any influence or dealings with "anti-social elements."
The bank pledged to "oppose firmly the activities of any anti-social elements that threaten the rule of law, public order and safety" and to ensure compliance with its code of conduct.
Finance Minister Taro Aso said he needed to learn more details about the case before commenting.
(Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)
Flight of Her Life
Julie Spencer went from her father's funeral to the state championship in the same day
Engineers have discovered new cracks and movement on Seattle's viaduct
A Tacoma furniture store writes the checks for Percy Harvin's Super Bowl kick return
Please login below with your Facebook, Twitter, Google+ or Disqus account. Existing MyNorthwest account holders will need to create a new Disqus account or use one of the social logins provided below. Thank you.