OSAKA -- The Osaka District Court on Wednesday ordered a former president of the now-defunct trading house Itoman Corp. to pay 2 billion yen in damages to the trading firm that absorbed Itoman.

Sumikin Bussan Corp., based in Osaka, won the damages against Yoshihiko Kawamura, 77.

Sumikin charged that Kawamura was responsible for more than 2 billion yen Itoman lost on loans, worth 20 billion yen, extended in April and May 1990 to the golf course developer Satsuma Kanko in Kagoshima Prefecture, which later failed. Kawamura was then president of Itoman, also based in Osaka.

In court, Kawamura contended that the loan was extended after being screened in accordance with company rules and was deemed repayable given the business conditions at that time, when Japan was at the peak of the asset-inflated bubble boom.

Sumikin argued that the collateral offered for the loan was overvalued.

Presiding Judge Mitsuhiro Ikeda concluded that Kawamura "approved 20 billion yen in loans complacently without looking into if they could be repaid and without securing proper collateral."

The judge said the collateral provided by the developer, including the land for a golf course and stocks, had a total value of only 6.4 billion yen -- far below the amount of the loans. Kawamura also failed in his duty as a board member to assess the feasibility of the development project, the judge added.

Kawamura was given a seven-year prison term in September 1999 by the Osaka District Court for breach of trust in the Itoman case, a sentence he has appealed.

He was found guilty of conspiring with others in a case where 300 billion yen in Itoman funds was diverted to buy paintings at sharply inflated prices and for investing in shady property deals.

The bad deals led to Itoman's collapse and subsequent absorption in 1993 by Sumikin, a subsidiary of Sumitomo Metal Industries Ltd.