OSAKA — Former top executives of the failed Kofuku Bank pleaded not guilty Friday to charges of unlawfully providing loans to their family companies, causing the bank 9.3 billion yen in losses. In their first hearing before the Osaka District Court, Tokusuke Egawa, 72, former president of Kofuku Bank, and Benji Egawa, 70, Tokusuke’s younger brother, both denied committing aggravated breach of trust. “I am sorry for causing troubles to customers and the bank employees with my failure in management,” Tokusuke Egawa said in court. “I will provide as much of my assets as possible, but I never intended to profit myself. All I had intended was to maintain the credibility of Kofuku Bank.” Benji Egawa also denied intent to damage the bank. According to prosecutors, the two arranged a 2.5 billion yen loan to Sogo Housing Co., an Egawa family company, without proper collateral in August 1995, knowing the money would not be repaid. At the time the loan was provided to Sogo Housing, the realtor already had 4.2 billion yen in outstanding loans that were also unsecured, prosecutors said. The two Egawas also loaned 6.8 billion yen to the Osaka-based realtor Kowa Fudosan between April 1997 and last March, without securing mortgages, while knowing the money would probably be irrecoverable, prosecutors said. Kowa Fudosan, another Egawa family company, was declared bankrupt in August. Tokusuke Egawa, who said he would provide his assets to the bank just before it became insolvent, owned up to charges related to the concealment of 350 million yen in assets to avoid their seizure after the bank’s collapse. “I was not in a normal state of mind,” he said. “I am sorry for that.” According to prosecutors, Tokusuke Egawa and his eldest son, Tokuaki, 44, concealed 290 million yen in cash and discount bonds worth 60.4 million yen in a closet in the son’s in-law’s house and in a bank safety deposit box rented under the name of a relative. Tokuaki Egawa was also indicted. Kofuku Bank, formerly run by the Egawa family, was declared insolvent in May by the Financial Reconstruction Commission, with a debt excess reaching 210 billion yen. It has since been put under temporary state control.
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