Yamaichi Executives Quit Over Japan Financial Payoff Scandal

The chairman, president and nine other executives of Yamaichi Securities Co resigned on Monday to take responsibility for the firms suspected payoffs to a racketeer at the centre of a high-profile financial scandal.

Senior managing director Shoji Saotome replaced chairman Tsugio Yukihira and senior managing director Shohei Nozawa succeeded president Atsuo Miki, the company said.

Our firm is determined to make a clean break with the negative legacy of the past, Nozawa said, in a refrain heard in recent weeks from executives at other financial firms tainted by the scandal.

Nozawa told a news conference the new management would stress transparency in its dealings with shareholders and customers.

 

Saotome said the new management teams priority was to restore clients trust in the firm.

Further casualties of the scandal, which has also ensnared giant brokerage Nomura Securities Co Ltd and Dai-Ichi Kangyo Bank, included three senior Yamaichi managing directors and several managing directors.

More than a dozen people, including top executives from Nomura and DKB, have been arrested in the affair and both firms have carried out a sweeping reshuffling of top management.

Yamaichi, the smallest of Japans biggest four brokerages, is suspected of making 79 million yen ($686,000) in illegal payoffs to Ryuichi Koike, the sokaiya racketeer at the heart of the Nomura-DKB scandal.

Outgoing president Miki and departing chairman Yukihira told reporters they were not involved in the scandal and learned of it only last month.

Yukihira added that he had never met the Koike, who has been in custody since his arrest in May and later indictment on charges of accepting compensation from Nomura for financial losses, in violation of the Commercial Code.

Sokaiya buy shares in companies and try to extort money from them by threatening to expose dubious business practices.

Alternatively, they are sometimes employed by firms to quash questions from legitimate shareholders at annual meetings.

Payoffs to sokaiya have been illegal since 1983, but many companies have found it tough to cut off underworld ties.

Last month, the Finance Ministry imposed on Nomura and DKB the harshest administrative penalties ever meted out in Japan for violations of securities or banking laws.

The scandal coincides with the start of Japans so-called Big Bang reforms aimed at introducing more competition and global standards into the countrys long-sheltered financial sector.