Japanese Local Lender Ordered to Partially Suspend Biz

Tokyo, Oct. 31 (Jiji Press)–Japan’s Financial Services Agency on Friday issued a business improvement order to Iwaki Shinkumi, including partial suspension of its operations, after the regional credit cooperative was found to have provided funds to antisocial forces. The cooperative, based in Iwaki, Fukushima Prefecture, northeastern Japan, will be forced to suspend lending to new clients for one month from Nov. 17. According to the FSA, Iwaki Shinkumi provided cash to antisocial forces and extended loans to firms owned by such racketeers. A special investigation committee set up by Iwaki Shinkumi said Friday it has newly found that most of the roughly 850 million yen to 1 billion yen spent for unknown purposes, discovered during its probe into the cooperative’s fraudulent lending, was provided to antisocial forces. Iwaki Shinkumi also extended loans to struggling large borrowers via accounts opened without the consent of depositors, in a practice known as bypass lending. It was the second time this year that the cooperative was slapped with an FSA business improvement order. The first order was imposed in May, after Iwaki Shinkumi was found to have concealed a significant amount of fraudulent loans over many years. As the government pumped 20 billion yen of public funds, or taxpayer money, into Iwaki Shinkumi in 2012, after the March 2011 powerful earthquake and tsunami, the FSA’s supervisory responsibility over the lender may also be called into question. In 2019, Seibu Shinkin Bank in Tokyo was ordered by the FSA to improve operations for its link with antisocial forces. END [Copyright The Jiji Press, Ltd.]