TOKYO —
A loans-to-mobsters scandal that is gripping Japan's banking sector has widened after major lender Shinsei Bank admitted doing business with organized crime figures.
The country's finance minister on Friday lauded Shinsei after it admitted a day earlier that one of its subsidiaries made dozens of loans to the yakuza.
The criminal syndicates are involved in activities ranging from prostitution and drugs to extortion and white-collar crime.
Shinsei said that two branches of Shinsei Trust & Banking Co and Aplus Co, a credit company, had made business loans to gangs during the summer. The bank said the loans are now being liquidated after it was discovered that many of them belonged to yakuza.
According to Shinsei Bank officials, after a brief investigation, as many as 10 accounts among their "A-plus" joint business loan holders were discovered to belong to gangs.
Shinsei said it is also urging all its branches and affiliates to check their "A-plus" joint business loan accounts for links to other gangs. Group loans of this category can include companies dealing in life insurance, damage insurance and others and as such, Shinsei Bank is also advocating that before offering a loan and in order to check whether links to gangs exist or not, all companies consult with a credit company in an effort to strengthen prevention programs for the future.
"Our internal controls were not strict enough," Shinsei President Shigeki Toma told reporters in Tokyo on Thursday.
The revelation comes days after Japan's financial watchdog said it would probe the country's top three banks in the wake of a scandal that has made headlines for weeks, and reportedly sparked a police investigation into Japan Inc.'s ties with organized crime.
The Financial Services Agency (FSA) said it would look at Mizuho Financial Group's business dealings as well as rivals Mitsubishi UFJ and Sumitomo Mitsui Banking Corp, without disclosing further details.
Mizuho has been under fire since it emerged in September that it processed hundreds of loans worth about $2 million for mob members.
News of the FSA's latest probe came a day after a panel of lawyers hired by Mizuho said bank executives knew it was doing business with gangsters, but failed to stop the practice.
On Friday, Japan's finance minster Taro Aso called Shinsei's admission "sensible", days after he slammed the Mizuho transactions as a "huge problem" and said the bank's initial—and incorrect—claims that executives knew nothing about the shady loans was "the worst thing a bank can do".
Authorities have long battled to keep gangsters from infiltrating Japan's corporate sector amid fears about mob involvement in stock trading and the real estate sector, among other legitimate activities.
In 2007, regulators penalized a unit of Mitsubishi UFJ, the country's biggest lender, for doing business with organized crime.
© 2013 AFP
