Public prosecutors appealed on Thursday the acquittal of two former presidents of the failed Hokkaido Takushoku Bank in a case involving 8.57 billion yen in allegedly dubious loans that the major bank lent to a local business group.
The Feb. 27 ruling by the Sapporo District Court also acquitted a former president of the Hokkaido-based Therme group, who had been accused of conspiring with the former presidents of the bank, popularly known as Takugin, for about 4.7 billion yen of the loans.
Sapporo prosecutors had demanded five-year prison terms for former Takugin Presidents Hiroshi Yamauchi, 75, and Sadamasa Kawatani, 68, for aggravated breach of trust for providing the loans, which soured, and a three-year term for Therme's Yoichi Nakamura.
According to the court, Yamauchi and Kawatani caused losses to Takugin by lending 8.57 billion yen to the Therme group, which was engaged in Sapporo resort development and other projects, between April 1994 and October 1997.
Prosecutors said the bankers knew the group lacked repayment capacity after the burst of Japan's asset-inflated economic bubble in the early 1990s, but continued providing dubious loans without sufficient collateral out of fears that their own positions would be jeopardized if they cut off the loans and let the group fail.
Yamauchi, Kawatani and Nakamura had all pleaded not guilty. The former bankers said they undertook the actions for the benefit of the Sapporo-based bank and claimed their decisions were justifiable under the circumstances at the time. Nakamura also said he intended to repay them.
The district court acquitted the three, saying that although the Takugin chiefs failed to carry out their duties faithfully, it could not be proved that Yamauchi gave the go-ahead for the loans out of his desire for self-protection.
Takugin collapsed in November 1997 under 1.172 trillion yen in debts.