Tokyo police Friday arrested a former employee of Nichiei Co., the leading nonbank lender of commercial loans, on suspicion of extortion and violating the Moneylending Business Law.

In connection with the arrest, law enforcement officers from the Metropolitan Police Department the same day searched 14 locations, including Nichiei’s head office and the private home of Nichiei President Kazuo Matsuda, both located in Kyoto.

Arrested on Friday was Yukihiro Wada, 45, of Yotsukaido, Chiba Prefecture, currently an employee of Nichiei-affiliated Nihon Shinyouhoshou Corp.

Police plan to question Matsuda and accuse the company as a whole of unlawfully trying to collect loans, sources said.

Sources close to the case said the questioning would focus on whether the firm was involved in systematically using threats and intimidation to have its loans repaid.

Financial authorities are considering punitive measures against the firm, such as a temporary suspension of a portion of its business, if they determine Nichiei resorted to force to reclaim its loans.

The sources said it will be the first time a commercial loan dealer is accused of violating the lending law.

According to investigators, while working for Nichiei between early April and early May 1998, Wada called a Chiba Prefecture couple in their 50s who owed Nichiei 7.2 million yen into Nichiei’s Chiba branch and told them to repay the loan by any means, including selling their kidneys. Wada allegedly called the couple “bastard thieves” and “good for nothing.”

Wada is suspected of having placed dozens of threatening telephone calls to extort a total of 800,000 yen in cash and securities out of the couple, whose names have been withheld, police said.

The self-employed couple received an initial 1.5 million yen loan from Nichiei in 1993, and later received more Nichiei loans. They effectively went bankrupt in the spring of 1998.

Nichiei is the top firm in the area of “shoko” loans, which are mainly extended to small and medium-size firms without collateral and at high interest rates. Shoko loans require a third-party guarantor.

On Oct. 30, former Nichiei employee Eisuke Arai, 25, was arrested on suspicion of threatening a customer by telling him to sell his organs to repay his loans. He was charged last week with attempted extortion.

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