OSAKA -- Kansai Kogin, a failed local credit union whose former executives were arrested last week in a breach of trust case, pressured recipients of loans in the late 1990s to buy memberships of a golf course operated by an affiliate by threatening to withdraw the loans, sources close to the case said Saturday.

Employees of the credit union, which mainly served the South Korean community, pressured customers to buy memberships of the golf course, operated by Koma Kaihatsu, in the second half of the 1990s even though they knew the affiliate was on the brink of bankruptcy, the sources said.

Despite the coercive sales tactics, the golf-club operator continued to operate in the red, the sources said.

Koma Kaihatsu's financial standing started to worsen after it invested to expand and renovate a golf course in the village of Tsukigase, Nara Prefecture, in the early 1990s.

After the renovation work was completed in 1994, Kansai Kogin imposed sales quotas for memberships of the golf course on its employees, who in turn threatened to cancel customers' loan contracts unless they purchased memberships, the sources said.

The employees also offered attractive loan conditions as incentives, the sources said.

A man in the city of Higashi-Osaka in Osaka Prefecture, who had received 60 million yen in loans from the credit union, initially rejected a branch manager's request to purchase a golf-course membership in 1999.

However, after the branch manager told the man the credit union would stop dealing with him, he bought a membership for 30 million yen on credit, the sources said.

Seven people, including former Kansai Kogin Chairman Lee Hui Gon and Toshio Horitsugi, 68, former president of Koma Kaihatsu, were arrested Friday on suspicion of breach of trust in connection with illegal loans to Koma Kaihatsu.

The police believe Lee, 84, and others continued to extend loans to the golf-club operator despite knowing it would go bankrupt, making the loans irrecoverable.

The Osaka Prefectural Police suspect some 2 billion yen in loans extended to Koma Kaihatsu between September and November in 1997 financially damaged Kansai Kogin.

Koma Kaihatsu filed with the court for corporate rehabilitation procedures in April 2001.

The sources also said Pak Chung Hong, 58, a former vice president of the credit union and one of the seven men arrested, transferred half of the ownership of his house and land in Yamato-Koriyama in the prefecture to his wife in February 2001.

Horitsugi also transferred ownership of his house to his wife in October 2000. In addition, four former and current executives of Kansai Kogin took similar steps around December in 2000, when the credit union collapsed.

The police suspect the moves by the six were an attempt to conceal property to evade seizure by the court.

The police on Saturday sent papers on the seven suspects to the Osaka District Public Prosecutors Office.