A management organization for political funds of Michio Ochi, who was named financial reconstruction minister in Prime Minister Keizo Obuchi's new Cabinet last week, has received 92.75 million yen in uncollateralized loans from financial institutions, according to a recently released Home Affairs Ministry report.
Ochi's office admitted the loans were not secured with collateral but claimed they don't constitute special favors from the banks.
A Lower House member and former Finance Ministry bureaucrat, Ochi took over from Hakuo Yanagisawa as chief of the Financial Reconstruction Commission, which holds power over the government's handling of financial failures as well as infusion of public funds into banks.
According to the Home Affairs Ministry's fiscal 1998 account report on Ochi's fund manager, the New Economic Research Institute (Shin Keizai Kenkyujo), it held 92.75 million yen in outstanding uncollateralized loans from five banks as of Dec. 31.
The loans include 15 million yen from Dai-Ichi Kangyo Bank, 20 million yen from Bank of Tokyo-Mitsubishi and 20 million yen from Fuji Bank. It also received loans from two smaller Tokyo-based financial firms: 23.95 million yen from Sugamo Shinyo Kinko and 13.8 million yen from Oji Shinyo Kinko.
Ochi's office said the loans were provided on the basis of "mutual trust," rather than collateral.
Takao Ochi, the minister's son and secretary, said the lawmaker himself has acted as guarantor for the loans. "(The fund management body) borrowed the money at a regular interest rate, and is repaying the loans on schedule," he added.
All five banks said they cannot comment on specific loan transactions.