A former president and two former managing directors of Nomura Securities Co. pleaded guilty Tuesday to conspiring to pay 370 million yen to a “sokaiya” corporate extortionist in one of the biggest financial scandals to rock the nation this decade.
Former Nomura President Hideo Sakamaki, 62, and former Directors Nobutaka Fujikura, 55, and Shinpei Matsuki, 53, are charged with violating the Commercial Code and the Securities and Exchange Law by giving payoffs to sokaiya Ryuichi Koike, 54, who also faces trial. Nobuyuki Koga, a Nomura director representing the brokerage for its Securities and Exchange Law violations, also pleaded guilty in the arraignment before the Tokyo District Court.
The Nomura trial is the first in a series of cases involving Koike’s dubious ties with the Big Four brokerages and Dai-Ichi Kangyo Bank. Koike is scheduled to stand trial in a separate procedure next Tuesday. Each of the four defendants, all wearing dark blue suits, said, “(The indictment) is correct,” when asked to reply to a judge’s request to enter a plea.
A lawyer for the defendants called for leniency, saying he hopes full consideration will be given to the “socioeconomic circumstances” that led to the payoffs. The court should carefully examine the realities of such racketeers and their links to gangsters, as well as the way many Japanese companies, not only Nomura, have handled shareholders’ meetings, the lawyer read from a prepared statement.
Sokaiya buy stock in companies to gain access to shareholders’ meetings, and then threaten to disrupt the meetings by revealing embarrassing information unless they are paid off. According to prosecutors, Sakamaki, Matsuki and Fujikura diverted about 49.7 million yen in stock transaction profits made by Nomura to a company run by Koike’s brother between January and June 1995.
Koike, an influential racketeer who owned 300,000 Nomura shares, further pressed the executives to compensate for trading losses in his account with the firm, the prosecutors said. Fujikura and Sakamaki then approved payment of 320 million yen in cash to Koike, ordering a Nomura employee to meet the racketeer and hand him the money in March 1995, they added.
Prosecutors allege that Nomura paid the money to ensure its annual shareholders’ meeting in June 1995 would not be disrupted. At that meeting, the controversial return of the “two Tabuchis,” former Chairman Setauya Tabuchi and former President Yoshihisa Tabuchi, to Nomura’s board of directors was approved. The two men had previously resigned from the board following an industrywide loss-compensation scandal that hit Nomura and other major brokerages in 1991.
The Commercial Code bans corporations from giving payoffs to sokaiya. The Securities and Exchange Law bans brokerages from compensating clients for investment losses and from conducting discretionary stock deals on behalf of investors.