AIJ faked audit report sought by Advantest

JIJI, Kyodo

AIJ Investment Advisors Co. President Kazuhiko Asakawa sent a falsified auditing report to client Advantest Corp.’s pension fund, investigative sources said.

Asakawa, 60, was arrested for suspected investment fraud Tuesday over massive losses involving his clients’ pension money. It is believed he asked an acquaintance who is a certified public accountant to falsify the report.

The Metropolitan Police Department has already searched the accountant’s house in Tokyo, the sources said Friday.

Advantest said it used its “kosei nenkin kikin” pension fund to purchase an investment fund from AIJ for some ¥1 billion in February 2009. It also spent ¥500 million to buy a different investment fund that apparently only had a market value of ¥18 million last August.

Since Advantest, one of the world’ largest makers of semiconductor testers, needed to reflect pension fund transactions in its financial statements, it requested fund performance and auditing reports from AIJ. Advantest adopted U.S. accounting rules when it listed its shares on the New York Stock Exchange in 2001.

In response, Asakawa asked the CPA to falsify the auditing report and sent it to Advantest.

The real auditing report was compiled by an auditing firm in Britain and submitted to AIJ and its sales arm, ITM Securities Co.

To hide the falsification of the Advantest report, Asakawa instructed ITM Securities President Hideaki Nishimura not to open the envelope containing the real one.

Tokyo police arrested Asakawa and three other officials, including Nishimura and AIJ executive Shigeko Takahashi, on Tuesday for allegedly bilking Advantest’s kosei nenkin kikin and another client pension fund out of a total of some ¥7 billion.

A defense attorney said Takahashi has denied any wrongdoing.

Meanwhile, other investigative sources said Asakawa received up to ¥500 million in dividends from an affiliated fund management company in which he held a stake.

These dividend payments were used to transfer some of the money AIJ was managing for corporate pension funds to Asakawa.

For several years until around 2005, Asakawa owned all of the shares in the fund management company, which received ¥4.5 billion in management fees from clients’ assets, the sources said.

Of the ¥4.5 billion, ¥2.7 billion was paid to ITM Securities Co., which is effectively under AIJ’s control, while the remaining ¥1.8 billion ended up at AIJ, they said.

Asakawa is alleged to have received between ¥400 million and ¥500 million of the sum AIJ earned in the form of dividends.

His income came to ¥79.80 million in the year through March 2011, and he held around ¥120 million in personal assets as of the end of last year.