In response to public concern, the government will draft a statement explaining the bailout of department store operator Sogo Co. with taxpayers’ money, officials said Friday.
Prime Minister Yoshiro Mori’s Cabinet decided in a meeting that morning to compile the statement and announce it before a session of the House of Representatives Finance Committee on July 17, the officials said.
The plan was proposed by Construction Minister Chikage Ogi, who said taxpayers were concerned their money would be used “without principle” to help other companies, the officials said.
The officials quoted Mori as saying in the meeting that the Sogo bailout scheme would minimize the cost to taxpayers and avoid confusion.
Meanwhile, Kimitaka Kuze, chairman of the Financial Reconstruction Commission, told a news conference Friday that former Sogo Chairman Hiroo Mizushima should be summoned for Diet questioning to help win public understanding of the bailout plan.
“I think there is a need for it to help the people understand what’s happening,” he said.
Opposition parties plan to propose summoning Mizushima to the Finance Committee to give unsworn testimony.
Under the scheme, the Deposit Insurance Corp. will buy 200 billion yen in loans to Sogo from Shinsei Bank, formerly the Long-Term Credit Bank of Japan, with an eye to waiving claims on at least 97 billion yen of the debts.
The opposition camp has attacked the scheme on the basis that taxpayers’ money will be used to aid a mismanaged private enterprise.
The FRC approved the proposed bailout June 30, prompting other creditor banks to pledge to forgive 630 billion yen of Sogo’s 1.7 trillion yen in debts.
The LTCB, which was put under state control in 1998 following its collapse due to massive loan losses, was sold to a private-sector consortium led by Ripplewood Holdings LLC of the United States on March 1. It assumed the new corporate name of Shinsei Bank on June 5.