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The Financial Services Agency on Thursday imposed administrative penalties on about 400 financial institutions for helping KSD, a scandal-tainted industrial mutual-aid foundation, increase its membership.

According to sources close to the case, the FSA has obtained evidence that about 30 percent of the more than 800 financial institutions in Japan received commissions from KSD in return for introducing their clients to KSD.

This constitutes a violation of the banking law that prohibits banks from conducting side business, the sources said.

Such commissions amounted to about 600 million yen in income for the banks during the three-year period through March 31, 2000, they said.

Of the 392 banks, credit unions and shinkin banks that were given penalties, 92 were ordered by the FSA to improve their operations.

It is unusual for the FSA to punish such a large number of financial institutions over a single case. The agency started its investigation into the case in November.

KSD is at the center of a bribery scandal that has led to the arrests of two Liberal Democratic Party politicians — Masakuni Murakami and Takao Koyama, who allegedly received money from KSD in return for favors helping the organization’s activities.

Former KSD President Tadao Koseki is also accused of breach of trust for dubious financial transactions that damaged the organization’s coffers.

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