• Kyodo

  • SHARE

An internal probe at Shoko Chukin Bank, the government-backed lender for small and midsize companies that is mired in a scandal over improper financing, has found it handed out ¥265 billion ($2.3 billion) in shady loans, the bank said.

Shoko Chukin President Kenyu Adachi said in a news conference Wednesday that he will step down “at an appropriate time,” because the government ordered the lender to clarify management’s responsibility and come up with measures to prevent a recurrence.

Revealing the widespread nature of the misconduct, the investigation also found that nearly the entire bank was involved, with 444 employees in 97 of its 100 offices, all in Japan, involved in 4,609 counts of malpractice — including the falsification of documents used to extend loans.

The bank, based in Tokyo, abused a government-backed system meant to provide companies with aid in the wake of emergencies such as a financial crisis or natural disaster, approving low-interest loans to firms that did not fulfill criteria. Some cases went back to 2008, when the system was created.

Such emergency financing makes up about a third of Shoko Chukin’s outstanding loans.

The bank will call on past and current executives who turned a blind eye to the practice, including the president, to forfeit some of their pay.

The Ministry of Economy, Trade and Industry, which oversees Shoko Chukin, on Wednesday issued a business improvement order — an administrative slap on the wrist — to the bank, its second such order since May.

Hiroshige Seko, the head of the ministry, and other top officials will return part or all of their salaries for the past two months, the ministry 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.

SUBSCRIBE NOW

PHOTO GALLERY (CLICK TO ENLARGE)