Tokyo prosecutors have arrested three people, including the president of Tokyo General Corp., a failed commodity futures brokerage house, on suspicion of faking its financial statements and padding the deposit balance by more than 20 billion yen.
The three, including two former executives of the company, are accused of violating a law on commodity exchange for such actions as allegedly combining some customer assets with the company’s and submitting false reports on asset management.
Commodity futures brokerages are required by law to manage customer assets and the firm’s assets separately.
The three, arrested Monday, are Katsumi Iida, 65, president of the Fukuoka-based Tokyo General; Tadahiro Mukuno, 60, former executive director; and Kusuo Mutaguchi, 57, former managing director.
The Tokyo District Public Prosecutor’s Office suspects the three misappropriated the customers’ assets and padded the remaining outstanding deposit balance, and is now tracing where the misappropriated money was used.
The false reports were filed to the Agriculture, Forestry and Fisheries Ministry and the Ministry of Economy, Trade and Industry Ministry — the two ministries in charge of supervising commodity futures brokerages.
According to an investigation, Iida and the others presented in September 2001 a false report on the outstanding balance of several bank accounts to the two ministries during on-site inspections. The balance was padded by about 10.8 billion yen.
Investigations showed that Iida and the others submitted certificates to METI from January to February 2003, in which the certificates carried a padded amount of about 10 billion yen and made it appear customer and company assets were managed separately.
Iida and his accomplices submitted a similarly forged financial statement to the Association of Compensation Funds for Consigned Liabilities in Commodity Futures. The association is now considering bringing a case against them.
In January, the two ministries revoked Tokyo General’s trading license for mismanaging client assets in violation of the commodity exchange law. The company subsequently dismissed its entire workforce of 364, effectively closing down its business.
Tokyo General was established in 1960. It enjoyed increased business productivity from 1982 when Iida became president.
In the fiscal year ending in March 1994, its operating revenues totaled 23.8 billion yen, but in the fiscal year ending in March 2003, the figure dropped to 15 billion yen.
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