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The Sapporo District Court on Tuesday ordered seven former executives of the failed Hokkaido Takushoku Bank (Takugin) to pay a combined 270 million yen in damages to the state-run Resolution and Collection Corp. for extending illicit loans to a now-defunct Hokkaido interior furnishing firm.

RCC had demanded 800 million yen in damages, but the court said the defendants should compensate for the shortfall after the disposal of collateral.

Presiding Judge Yoichi Sato said in handing down the ruling: “The former executives could have easily predicted the risk that such speculative loans could become unrecoverable. It is clear that they failed to perform their duties.”

According to the court, the failed bank loaned a total of 3 billion yen to the company in January and February 1989 and again in February and March 1992 as a fund for speculative commodity dealing. Of the 3 billion yen, 1.4 billion yen became unrecoverable.

RCC said lending money for speculative dealing infringes on the bank’s responsibility to the public.

The former bank executives asked the court to dismiss the suit, saying they fully checked the validity of the loans and claimed there were no irregularities in the approval process.

But, Sato said, “(The executives) decided to extend the loans without attaching much weight to hypothetical value or taking safeguard measures.”

Upon hearing the ruling, lawyers representing the defendants said their clients plan to appeal.

The ruling was the second in connection with five suits the government-backed debt-collection entity has filed seeking compensation from former Takugin executives.

RCC is seeking some 11.5 billion yen in compensation from 14 former executives, including the seven fined Tuesday.

The first ruling was handed down in July, when five former Takugin executives were ordered to pay a combined 1 billion yen in compensation to RCC, as demanded by the plaintiff.

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