The president of Chiyoda Mutual Life Insurance Co. in 1992 pushed through loans to a financially troubled golf course developer that eventually went bankrupt, resulting in a loss of 14.7 billion yen to the insurer, sources close to the rehabilitation process of the failed insurer said Saturday.

An investigative committee set up by Chiyoda to look into former executives' responsibility for sloppy management, which damaged the firm's financial health and eventually led to its collapse in October, found that then President Yasutaro Kanzaki got the insurer to continue loans to Tokyo Zaishi Golf Club, despite objections from other members of the board.

The developer went bankrupt four years later, forcing Chiyoda to give up claims on some 12.7 billion yen in loans and to provide 2 billion yen to start another golf course development project, the sources said.

The committee, composed of 14 lawyers, may propose a lawsuit be filed to recover damages stemming from the loss, the sources said. The panel is also looking into criminal responsibilities of the former executives.

Chiyoda's link with Tokyo Zaishi can be traced back to June 1990, according to the sources. The life insurer extended 15 billion yen in loans to the company, which put up the land for the golf course in Shibayama, Chiba Prefecture, as collateral.

When the developer got into financial trouble, Chiyoda's managing directors held a meeting in May 1992 to discuss its loans to the firm.

The company's treasury division chief then proposed continuing loans to the firm. However, other members of the board complained that golf courses do not offer much in the way of future returns but the directors were not able to reach a consensus on the matter, the sources said.

The managing directors met several times and Kanzaki eventually pushed through the loans to the troubled company, the sources said. Kanzaki, who pursued an aggressive policy of expansion since the late 1980s, later became chairman of Chiyoda.

The Zaishi Golf Club reopened as the Shibayama Golf Club this September with the help of a leasing company and banks.

The committee also learned that in the spring of 1992, Chiyoda's top management became aware of a number of questionable loans extended to other firms without proper screening. Executives in charge of lending were demoted.

Chiyoda filed for rehabilitation with the Tokyo District Court on Oct. 9, becoming the first life insurance company to apply for assistance under a recently enacted special rehabilitation law. According to the firm, it has debts of 2.93 trillion yen.

Rehabilitation procedures were launched on Oct. 13.

Chiyoda's collapse is attributable to its reckless investments during the "bubble" boom of the late 1980s to early 1990s in a number of risky items that other financial firms balked on. The loans to the golf course project is one such deal.

"In those days, people who needed to hit the brakes stepped on the accelerator instead," recalls a former Chiyoda executive, explaining how investments in risky projects were continued without proper screening.

The treasury division, over which Kanzaki exerted strong influence, was originally in charge of screening the projects that had been proposed by the company's loan division.

However, the situation changed when money started flowing in at a rapid pace during the bubble years and the insurer had difficulties finding safe investment opportunities.

Senior officials of the treasury division took the initiatives in proposing new loan projects, which were later approved effectively without screening by their colleagues, according to sources close to Chiyoda.