OSAKA -- Auditors and executives of the now-defunct "jusen" mortgage lender Nippon Housing Loan Co. have agreed to pay former shareholders 20 million yen for falsifying debt figures, sources close to the case said Friday.
However, the out-of-court settlement, reached June 12 with the Osaka District Court acting as a mediator, does not admit legal responsibility.
Twenty-nine former shareholders of the company had sued seven former Nippon Housing Loan board members, including the firm's former president, major auditor Asahi & Co. and Sanko & Co., a smaller Tokyo auditing company. The litigants accused them of preparing false securities statements. A total of 90 million yen was sought in damages.
The out-of-court settlement is unusual, according to lawyers representing the plaintiffs, because auditors rarely agree to settle cases involving alleged false earnings reports.
"Ever since we filed a lawsuit, auditors' awareness (about their responsibility) has been noticeably increasing," a lawyer said. "I hope this settlement will spur the momentum further."
In the lawsuit filed in 1996, the plaintiffs alleged that the former company officials knew their company's irrecoverable loans would amount to more than 670 billion yen but listed only part of the nonperforming loans on the firm's securities statements between 1991 and 1993.
The officials then submitted earnings reports that concealed the company's insolvency to the Finance Ministry, with the auditors certifying the reports as "correct," the plaintiffs said.
Asahi's public relations department said the company has not acknowledged its legal responsibility in the case and that it agreed to the settlement partly because the former Nippon Housing Loan officials had proposed it.