Ex-minister, execs held over investment product fraud

Tokyo police on Thursday arrested Jitsuo Inagaki, former state minister in charge of the Hokkaido and Okinawa development agencies, and five current and former employees of an investment consulting firm on suspicion of illegal investment product sales.

Inagaki, 76, is the former president of Capital Invest Japan and was state minister from 1996 to 1997 under Prime Minister Ryutaro Hashimoto.

Some of the five other suspects, including the firm’s current president, Hideo Shishino, 65, have links to gangsters, investigative sources said.

All six are suspected of violating a law regarding the regulation and receipt of capital subscriptions, deposits and interest on deposits.

The police suspect the company solicited about 700 million yen from more than 200 people, including many elderly, to invest in its financial products, by guaranteeing the principal and other benefits, which is a violation of the investment law, the sources said.

According to investigations, Inagaki and the others collected a total of roughly 24 million yen from 24 customers between May and December 2002, promising annual interest of at least 5.76 percent as well as a principal guarantee. The promises run counter to legal limits and other rules stipulated under the law.

While some clients admitted to having been skeptical of the financial products because the terms of the investments seemed too good to be true, they said that in the end they decided to proceed because a former Cabinet minister was the firm’s president, according to sources close to the investigation.

Capital Invest Japan, based in Tokyo, was established in 1977 under a different name. It was initially involved in real estate and interior work, but effectively went bankrupt in 1995, according to a credit research company.

Inagaki became the company’s president in January 2002, after losing his seat in the House of Representatives general election in June 2000.