JACCS also admits lending to yakuza

MUFG credit unit latest to reveal mob links, mum on amount

AFP-JIJI

Major credit company JACCS said Wednesday it loaned money to yakuza in the widening scandal sweeping through the banking system.

The admission by JACCS, a unit of the gigantic Mitsubishi UFJ Financial Group, is the latest in a growing line and comes as a government agency says it will buy shady loans to help companies keep their balance sheets clean.

A JACCS spokesman said an inspection of its books revealed several instances of cash loaned to figures with links to organized crime.

“Those cases were found linked to anti-social individuals after the initial screenings,” the spokesman said.

He refused to give an exact number but admitted it was “more than one but still a single digit.”

The banking sector has been reeling since the Mizuho Financial Group came under fire in September after revealing that it had processed hundreds of loans worth about ¥200 million to mobsters.

A panel of lawyers hired by Mizuho to probe the transactions said last week that “many officials and board members were aware of, or were in a position to be aware of, the issue.”

“However, they failed to recognize it as a problem, believing that the compliance division . . . was taking care of it,” said the panel’s 100-page report.

The company said 54 former and current executives will be punished, including Mizuho Bank Chairman Takashi Tsukamoto, who will step down from his post but stay on as head of the parent company.

In the wake of that report, the Financial Services Agency started a probe the country’s top three banks — Mizuho, Mitsubishi UFJ and Sumitomo Mitsui Banking Corp. — in an effort to weed out the practice of offering loans to the underworld.

Yakuza engage in activities ranging from gambling, drugs and prostitution to loan-sharking, protection rackets, white-collar crime and business conducted through front companies.

The gangs, whose existence is not illegal, have historically been tolerated by the authorities, although recently efforts have been made to choke off their funding sources.

Observers say the extent of the mob’s reach into legitimate areas of finance is sometimes the result of officials looking the other way, but often a loan may be extended in good faith to someone who appears to be above board. It is only later that the individual’s connection to organized crime is uncovered.

The Deposit Insurance Corp. of Japan began a scheme two years ago to help financial companies scrub their books of links to gangsters.

The agency buys the loans at a discount from the bank or credit card company, which must swallow the loss, while the government tries to recover the cash, an official at the corporation said.

Since its introduction in 2011, the agency has bought debts worth nearly ¥300 million. It has paid ¥11.7 million for them, the official said.