Former UFJ Bank Vice President Kazuyoshi Okazaki, 57, was sentenced Monday to 10 months in prison, suspended for three years, for masterminding efforts to thwart government inspections in 2003.

Two other former UFJ Bank executives — Sen Hayakawa, 55, and Masayuki Inaba, 52 — were each sentenced to eight months, suspended for three years, for collaborating.

The Tokyo District Court also ordered UFJ Bank, the key banking unit of the nation’s fourth-largest financial group, to pay a 90 million yen penalty as a corporate defendant.

The three former senior officials blocked Financial Services Agency’s inspections, which ran from August to October 2003, by systematically hiding documents on major clients from inspectors, according to the ruling.

“A megabank blocking an inspection hurts the sound banking system and considerably undermines public confidence,” presiding Judge Tsutomu Aoyagi said.

The adverse impact on society cannot be overlooked, he added.

The judge said Okazaki was No. 2 at the bank and masterminded the act. Prosecutors did not indict his boss, then UFJ Bank President Masashi Teranishi, for either authorizing or instructing the blocking of inspections for lack of evidence.

As for motive, the judge cited the defendants’ fear of being forced to step down after the FSA slapped the bank with a business improvement order. They hid documents after learning that tough inspectors would be coming to conduct investigations, the judge said.

Aoyagi said the three-judge panel decided to suspend the sentences after taking note that the three defendants pleaded guilty and were reflecting on the case.

UFJ Bank as a corporate defendant bears serious responsibility because it continued to deny the act was systematic after the case was revealed, Aoyagi said.

Okazaki said he accepts the ruling and will not appeal.

The prosecution demanded 10 months for Okazaki, eight months each for Hayakawa and Inaba and a 100 million yen penalty for UFJ Bank.

The defendants did not dispute the indictment in court.

The scam came to light after the FSA received an anonymous phone call from a whistle-blower in October 2003. The Tokyo District Public Prosecutor’s Office arrested the three in December 2004.

UFJ Bank is the core unit of the Osaka-based UFJ Holdings Inc., which is set to merge Oct. 1 with Mitsubishi Tokyo Financial Group Inc., Japan’s second-largest financial group, to create the world’s largest financial services concern.

MTFG and UFJ announced in February that their merger will be based on a ratio of 0.62 MTFG share to one UFJ share.

The two groups said the new organization will be called Mitsubishi UFJ Financial Group.

It aims to become one of the world’s top five financial institutions in terms of market value by fiscal 2008, they said.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.