The Yomiuri Shimbun (Jul. 16, 2010)
Arrest of ex-bank head debunks reformist mask
Former Incubator Bank of Japan Chairman Takeshi Kimura, incumbent President Tatsuya Nishino and three other former and current executives have been arrested on suspicion of violating the Banking Law by obstructing an audit of the Financial Services Agency.
As financial inspections by the agency loomed last year, the then executives deleted--on Kimura's orders--280 e-mails likely to have been of interest to the inspectors.
Suspicions of other shady behavior by the bank have since emerged. We hope the Metropolitan Police Department uncovers the whole truth of the case through an exhaustive investigation.
Kimura, who started his business career as a Bank of Japan official, served as a brain truster of Heizo Takenaka, who was state minister in charge of economic, fiscal and financial policy in Junichiro Koizumi's administration. Later, Kimura established the Incubator Bank of Japan with like-minded comrades at the Junior Chamber International Tokyo. The bank's motto was to support small and midsize enterprises.
Against the backdrop of structural reform pushed by Koizumi's administration, market fundamentalism and the "profit-comes-first" principle based on the law-of-the-jungle philosophy had many strong followers among young entrepreneurs.
This excessive worship of money was exemplified by the window-dressing case that battered Livedoor Co., including its former president, Takafumi Horie, and insider trading committed by the so-called Murakami Fund, whose president was Yoshiaki Murakami.
During this period, Kimura prided himself as being a standard-bearer of financial reform. In the end, however, he betrayed himself--just like Horie and Murakami did.
Despite once being deeply involved in financial administration, Kimura now is a suspect in a criminal case. His alleged actions cannot be justified.
Writer Go Egami, who was one of the bank's outside directors, has been appointed as the bank's new president.
Egami has written about his days as a banker at the defunct Dai-Ichi Kangyo Bank. In one memorable episode, he pressed the Dai-Ichi Kangyo management to terminate its ties with sokaiya corporate racketeers.
The management environment at Incubator Bank is severe. As president, Egami must tread a thorny path.
It has become apparent that the bank put profit-making before all else, while projecting itself as "the friend of small and midsize enterprises."
The bank allegedly charged a hefty commission when asking major moneylender SFCG Co. to buy back loan claims. This, in effect, was the equivalent of imposing an illegally high interest rate of about 46 percent, far above the upper limit stipulated in the Investment Deposit and Interest Rate Law, according to investigation sources. SFCG, which earned an unsavory reputation for its strong-arm loan collection methods, is undergoing bankruptcy procedures. The bank disguised the transactions as legitimate trades of loan claims. However, a healthy bank would not make such moves that took away proceeds from a loan shark facing difficulties raising funds.
More suspicions remain
Incubator Bank also allegedly recommended a person affiliated with the bank be appointed as an executive to a company that had applied for a loan, and pressed the applicant firm to accept the plan. The person consequently took control of the firm's management. The bank thus had shades of a corporate raider.
The FSA inspections that began last year exposed the bank's illegal activities. But we wonder if the agency could have detected the bank's true nature--and penchant for breaking the rules--much earlier.
Investigators will try to trace the inner workings of a group of the bank's client companies, a network established under Kimura's presidency. The bank extended loans to these member firms, which in turn accepted requests to boost the bank's capital.
We wonder whether such loans and capital increases were legal. The MPD should get to the bottom of this matter, too.
(From The Yomiuri Shimbun, July 15, 2010)