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The Japan External Trade Organization said Saturday that a former director as well as four of its employees in Hong Kong obtained unlisted shares from a local firm and earned dividends on them.

The employees, including two officials on loan from the Ministry of Economy, Trade and Industry, received a total of about 500,000 yen in dividends from Techno Centre Ltd. from 2000 to 2003, JETRO said. The company runs an industrial park in Shenzhen, China, targeted mainly at Japanese companies.

Meanwhile, the 63-year-old former director has admitted to sending a $3,500 check to Jiro Ishii, Techno Centre’s representative, after promising to make a donation when he was at JETRO between 1997 and 1998, JETRO officials said. He later learned from Ishii that the money was used to buy Techno Centre shares in his name.

JETRO, a semigovernmental organization affiliated with METI, said that while it does not consider the matter as insider trading or bribery because the employees did not have any jurisdictional relationship with Techno Centre and have not sold the shares, it would investigate to see whether other rules were breached.

The four could face disciplinary action if they made false reports, JETRO officials said.

According to JETRO, the four employees each invested about 400,000 yen in Techno Centre shares between 1994 and 1999, and subsequently received dividends in either Hong Kong dollars or yen.

They have told a JETRO internal investigation team they purchased the stock because they wanted to support the firm’s operations or they viewed the purchase as a donation.

Techno Centre decided not to go public during a shareholders’ meeting in 2000.

The Asahi Shimbun said in its Saturday morning edition that the company’s book-value per share was HK$1 at the time of its establishment, but it has since grown by more than 1.75 times.

JETRO said the organization does not have any contractual relations with Techno Centre and thus does not consider the company an interested party.

The organization said buying shares and receiving dividends from a noninterested party do not constitute a breach of JETRO’S professional ethics code.

But JETRO said it plans to review the organization’s existing ethics code and set up a committee of third-party experts to look into the matter.

“Although the purchase of the shares does not breach JETRO’s existing code of ethics, it will be deemed problematic if our Hong Kong office is found to have continuously introduced Techno Centre to Japanese companies,” JETRO Chairman Osamu Watanabe said.

Meanwhile, a METI official said Saturday the ministry will instruct JETRO to refrain from activities that cause any “misunderstanding” among the public.

“From now on, we will instruct (JETRO employees) not to cause any misunderstanding,” said an official of METI’s Trade Policy Division, which holds jurisdiction over JETRO.

Although the conduct does not violate JETRO’s ethics code, it is “problematic under social conventions” if its employees acquire stocks from a company whose business is related to that of JETRO, the official said.

According to the Asahi, Techno Centre has about 280 shareholders, both individual and corporate investors.

Among the individual investors are Japanese journalists, including an Asahi staffer who worked as an economics reporter in 1997, and a senior executive at Nikkei Business Publications Inc. who was an editorial staff writer for the magazine publisher in 1997, according to the Asahi.

The Asahi reporter could face disciplinary action because investing in the firm may have constituted a breach of the Asahi’s code of ethics that bans economics reporters from trading in stocks, an Asahi spokesman said.

The Nikkei executive wrote a book on Techno Centre’s Ishii in 1997. He returned 500,000 shares in the company after finding out in August that the shares had been issued under the name of him and his wife, according to Nikkei BP, a unit of Nihon Keizai Shimbun Inc.

A former Hong Kong Bureau chief at Kyodo News is also among the journalists who invested in the firm. He purchased 25,000 shares in March, according to Kyodo News.

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