AIJ head’s Diet apology skips how cash vanished

by Hiroko Nakata

Staff Writer

The president of scandal-hit AIJ Investment Co., Kazuhiko Asakawa, admitted Tuesday in the Diet that he had covered losses in corporate pension funds and promised false returns to lure clients.

Making his first public appearance since the firm’s massive losses of pension funds came to light last month, Asakawa told a Diet committee he didn’t initially intend to report padded figures for AIJ’s corporate pension fund assets.

As AIJ head, Asakawa, a former manager at Nomura Holdings Inc., attracted pension funds by promising high returns. The firm reportedly vowed a 241 percent return on one fund invested in Nikkei 225 options.

“I just didn’t want to return the funds with losses. I had confidence to regain what was lost,” he told the Lower House Financial Affairs Committee, answering a question about whether he had tried to cheat clients.

“I want to say clearly that I had no intention of deceiving my clients from the beginning,” Asakawa said, but he added he feels responsible for the fiasco.

In an opening statement, Asakawa apologized for taking a long time before appearing.

He had declined to appear before investors or reporters to explain what happened to the money managed by the Tokyo-based asset management firm, which the Financial Services Agency slapped with a monthlong business suspension on Feb. 24.

Last Friday and after repeated forewarning, the Securities and Exchange Surveillance Commission, which has inspected the troubled asset manager, raided the head office of AIJ and other locations to investigate how it came to make massive losses in managing pension money after fraudulently claiming high returns to investors.

The regulators suspect AIJ of breaking the Financial Instruments and Exchange Law by falsifying its investment performance data to lure corporate pension funds.

Also last Friday, the FSA stripped AIJ of its investment adviser registration and ordered ITM Securities Co., which is effectively under AIJ’s control, to suspend operations for six months.

The SESC said AIJ had ¥145.8 billion in pension fund assets under management but lost ¥109.2 billion, leaving it with only ¥8.1 billion in cash and deposits.

Asakawa denied he had privately spent any part of the profits gained by AIJ. The profits totaled ¥2.7 billion over nine years, including ¥920 million in fees.

Also testifying were Hideaki Nishimura, president of ITM Securities Co., which is effectively under AIJ, and Isao Ishiyama, a retiree of the now-defunct Social Insurance Agency who currently operates a pension fund consultancy.