Tokyo: Mizuho Financial Group executives knew the firm was doing business with gangsters but failed to stop it, a panel said Monday, as Japan’s finance minister slammed the banking giant over the affair.
One of Japan’s biggest banks, Mizuho has been under fire since it emerged last month that it processed hundreds of loans worth about $2 million for the country’s notorious yakuza crime syndicates.
The scandal has made headlines for weeks in Japanese media, and reportedly sparked a police investigation.
On Monday, a panel of lawyers hired by Mizuho to probe the transactions said that “many officials and board members were aware of, or were in a position to be aware of, the issue”.
“However they failed to recognise it as a problem, believing that the compliance division… was taking care of it,” said the panel’s 100-page report.
The company also submitted its own report to regulators Monday, and said 54 former and current executives would be punished, including Mizuho Bank chairman Takashi Tsukamoto. He would step down from his post but stay on as head of the parent company.
Mizuho Financial Group chief executive Yasuhiro Sato — who has acknowledged he “was in the position to know” about the loans but has refused to quit — would work without pay for six months, while other managers would also take wage cuts.
Finance Minister Taro Aso on Monday slammed the transactions as a “huge problem”, and said Mizuho’s initial claims to regulators that executives knew nothing about the shady loans was “the worst thing a bank can do”.
The bank later admitted top executives were “in a position to know” about the mob business.
“We have caused a lot of trouble for many people, including shareholders and other stakeholders,” Sato told reporters in Tokyo as he bowed deeply, in a typical gesture by Japanese executives dealing with a crisis.
“Again, I apologise sincerely… The problem was that we weren’t aware or sensitive enough to loans that were being done by an affiliate company,” he added.
He also said the bank will invite a former judge of the Supreme Court as an external board member to assure better compliance.
The panel’s report Monday called on Mizuho to overhaul its compliance department, noting that the transactions were made via a complicated scheme involving the affiliate firm.
“In a nutshell, they failed to recognise the loans as Mizuho’s own and relied on the other company for dealing with the issue,” panel head Hideki Nakagome told reporters.
Like the Italian mafia or Chinese triads, the yakuza engage in activities ranging from gambling, drugs, and prostitution to loan sharking, protection rackets, white-collar crime and business conducted through front companies.
The gangs, which themselves are not illegal, have historically been tolerated by the authorities, although there are periodic clampdowns on some of their less savoury activities.