The Financial Services Agency is likely to file a criminal complaint against UFJ Bank and several former bank executives later this month for trying to thwart an FSA inspection, sources close to the move said Saturday.
The FSA has determined that UFJ Bank, a core unit under ailing UFJ Holdings Inc., violated the Banking Law by systematically concealing and tampering with key documents that would have affected the classification of borrowers, the sources said.
The agency has also judged that it can now send the case to prosecutors because UFJ Holdings’ planned merger with Mitsubishi Tokyo Financial Group Inc. is making headway and the legal action will have little effect on the overall financial system, they said.
Individuals convicted of obstructing FSA inspections can face maximum penalties of a year in prison or a 3 million yen fine. A corporation can be fined up to 200 million yen.
According to FSA officials, UFJ Bank engaged in coverup activities during an inspection last autumn by concealing documents on its debtors and ripping up some materials in front of inspectors.
UFJ Bank also tampered with minutes of executive meetings and materials indicating that there were serious worries about the financial standing of major borrowers, the officials said.
In June, the FSA issued four business improvement orders to UFJ Holdings and UFJ Bank in connection with a range of operational problems, including its efforts to obstruct the agency’s inspection.
At first, UFJ Bank denied that it had intentionally thwarted the inspection in a systematic manner. But it made public the results of an internal probe in late July that found such actions had taken place under the direction of some former executives.
The bank also apologized for its earlier denial and penalized those involved by not paying retirement bonuses to a number of executives who had been fired.
The FSA apparently decided to resort to legal action after UFJ Holdings said Friday it will accept a capital infusion of 700 billion yen from Mitsubishi Tokyo in line with their plan to merge in October 2005.