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Loans for mobsters in Japan

October 29, 2013

Financial regulators in Japan have widened their probe into the loans-for-mobsters scandal, now targeting all of the country's three largest banks. Mizuho Bank has already sanctioned 54 of its executives.

epa03928018 Buildings are reflected in a Mizuho Financial Group Inc. sign in Tokyo, Japan, 28 October 2013. Japan_s Mizuho Financial Group Inc said it had punished a total of 54 current and former executives over its loans to organized crime groups, but a third-party panel found no sign of a deliberate cover-up. Mizuho Bank president Yasuhiko Sato said his salary would be cut for six months and other executives would step down from their posts or face pay reductions. The scandal surfaced in late September when Japan_s second-largest bank by assets was ordered to clean up its operations following an inspection by Japan_s Financial Services Agency. EPA/FRANCK ROBICHON
Image: picture-alliance/dpa

Japan's Financial Services Agency (FSA) announced on Tuesday that Mitsubishi UFJ Financial Group, Mizuho Financial Group, and Sumitomo Mitsui Financial Group Inc. would all be investigated for allegedly lending money to Japan's "yakuza" crime syndicates.

On Monday, the Mizuho Financial Group's chairman of banking business, Takashi Tsukamoto, resigned over the scandal. A consumer finance subdivision of Mizuho, Orient Corporation, made more than 230 loans worth $2 million (1.45 million euros) in total to people tied to organized crime, according to an internal investigation.

The panel of lawyers tasked with the investigation of Mizuho found that top executives were aware of business activities with yakuza gangsters but failed to stop it.

"Many officials and board members were aware of, or were in a position to be aware of, the issue," the panel wrote in its 100-page report, published on Monday.

"However, they failed to recognize the problem, believing that the compliance division ... was taking care of it," the report said.

Japanese Finance Minister Taro Aso criticized Mizuho's initial claims - which proved incorrect - that its executives knew nothing of the transactions. Aso said the denial was "the worst thing a bank can do."

The yakuza are transnational crime syndicates that are involved in everything from gambling, drugs, prostitution and protection rackets to white-collar crime and business conducted through front companies.

slk/tj (AFP, Reuters)