A former senior Finance Ministry official hinted to Yamaichi Securities Co. in January 1992 that it compensate a customer for its losses and hide the loss overseas, an in-house probe of the failed brokerage revealed April 16.
The finding contradicts recent Diet testimony by former ministry official Nobuhiko Matsuno, who was director general of the Securities Bureau at the time. Matsuno testified that he had made no suggestions to Yamaichi about how to resolve its problems with Tokyu Department Store Co.
According to the report, Atsuo Miki, then vice president of Yamaichi, visited Matsuno around Jan. 22, 1992, to discuss problems the brokerage was having with Tokyu Department Store in “tobashi” deals.
Tobashi deals involve the trading of stock whose market value has sunk below book value. Trades are shuffled among various firms with different business years to keep the losses from appearing in the books. In the case involving Tokyu, Yamaichi could not find a purchaser and was being pressured to pay compensation for the losses.
“Matsuno asked what Yamaichi was going to do about the affair, adding that ‘Daiwa (Securities Co.) seems to be planning to shift (similar losses) overseas,'” the report quoted Miki as saying. Matsuno suggested that Yamaichi contact the ministry’s deputy director general for details on an overseas transfer, according to Miki.
Yamaichi eventually agreed to compensate Tokyu for its losses and have its domestic rather than overseas firms accept the loss on Jan. 31, 1992.
In late January or early February, Miki again visited Matsuno at the ministry to explain Yamaichi’s steps, according to the report. He was told, “The (loss) figure is not that large for a firm like Yamaichi and one good run in the (stock) market will solve things,” according to the report. But in Diet testimony, Matsuno has repeatedly denied he suggested that Yamaichi could resolve its problems through loss compensation and tobashi deals, adding that he “never imagined” the firm would choose to move debts off the books.
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