Tadashi Okuda, a former chairman of Dai-Ichi Kangyo Bank, was sentenced Wednesday to nine months in prison, suspended for five years, for illegally lending some 11.8 billion yen to a “sokaiya” corporate racketeer in a scandal that shocked the nation’s finance industry.
The Tokyo District Court found Okuda, 67, guilty of conspiring with other executives to extend loans to Ryuichi Koike, 56, via Daiwa Shinyo, a nonbank moneylender affiliated with the city bank, during the period spanning 1994 to 1996 in violation of the Commercial Code.
Koike, who was given a nine-month prison sentence in April, had threatened to disrupt shareholders’ meetings unless the loans were made.
Wednesday’s ruling is the second conviction of a corporate chief in Japan. Hideo Sakamaki, a former president of Nomura Securities Co., was sentenced to a suspended one-year prison term in January.
All 11 DKB executives indicted in the Koike case have now been found guilty.
Judge Kiyoshi Kimura said that Okuda, who was the bank’s president at the time, played the most significant role among all involved in the lending.
He said that the whole incident would never have taken place if Okuda had mustered up the courage to refuse Koike.
“Since the chairman and the president had equal power (within the bank) at the time, the bank would not have been able to extend loans if either one had rejected Koike’s demands,” Kimura said.
However, the judge suspended Okuda’s sentence on the grounds that he publicly apologized for his misdeeds and has been punished enough by the loss of his job and positions in other organizations.
According to the court, Okuda gave instructions to lend a total of 11.78 billion yen to Koike on 52 separate occasions between July 1994 and September 1996 in order to buy his silence at the bank’s annual shareholders’ meetings from 1995 through 1997.
When Koike, who was already a DKB client, asked the bank for additional loans in July 1992, DKB rejected his request because the bank had already provided some 9 billion yen that had not been paid back, it said.
Koike then asked Rikiya Kijima, the now deceased president of a publishing company and allegedly an influential racketeer, to convince DKB to give him more loans.
In September 1992, Okuda, Kijima and Kunitsugu Miyazaki, another former DKB chairman now deceased, met at a restaurant in Tokyo’s Ginza district, where Kijima pressed the bank’s top executives for more money, the court said.
Miyazaki promised that Koike would get more loans, and Okuda ordered the bank’s general affairs officials to “review” Koike’s requests, it said.
Miyazaki committed suicide in his Tokyo home in June 1997, after he became a target of prosecutors investigating the payoff scandal.
Okuda owned up to the charges in his opening hearing in January 1998, but altered his statements during the course of his trial, claiming DKB was never directly involved in extending loans to Koike.
But prosecutors, who had asked for a nine-month prison term, said Daiwa Shinyo did not have the funds to extend the loans by itself, so it must have had financial backing from DKB.
Although Okuda appeared to argue various points of his indictment during the trial, he said at the closing hearing in May that he did not intend to plead innocent and just wanted to “tell the truth.”
The Commercial Code prohibits corporations from giving special benefits to shareholders.
Sokaiya racketeers purchase shares in companies to gain access to shareholders’ meetings and then threaten to disrupt them by making embarrassing revelations or asking embarrassing questions unless they are given financial favors.
More than 30 executives have been implicated in the scandal from DKB and the former Big Four securities houses — Nomura, Nikko Securities Co., Daiwa Securities Co. and the now-defunct Yamaichi Securities Co.
Koike allegedly used the funds provided by DKB to acquire stock in the four brokerages.
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