Police have questioned Marusan Securities Co. about its rationale for shouldering most of a loss incurred by an affiliated company, the president of the midsize brokerage house said April 6.
Eijiro Nagao said at a press conference that Marusan effectively shouldered 1.7 billion yen of the 2.2 billion yen loss at Shureisha, a securities trading company that was liquidated in March last year. Over the past several weeks, police have questioned Marusan executives, Nagao said, adding that he believes the company has not violated any law.
Nagao was referring to news reports that Shureisha was an asset management company privately run by Marusan's top executive, and that making the firm shoulder Shureisha's loss was inappropriate and therefore may be a case of breach of trust by the executive. "The company was not my own," Nagao said.
He said Shureisha was established in 1980 as a vehicle for Marusan to expand its business in different areas. Marusan and a few of its affiliated companies were major shareholders. Shureisha was liquidated in March last year as a result of massive latent losses that it incurred after the burst of the late 1980s bubble economy, Nagao said.
According to industry sources, Shureisha was a paper company established to receive former bureaucrats of the Finance Ministry. Nagao admitted that he gave instructions to Shureisha on dealing with securities and said he took responsibility for the poor direction by taking a 50 percent cut in pay for six months from March 1997.