Japanese Local Lender Ordered to Partially Suspend Biz

Iwaki, Fukushima Pref., Oct. 31 (Jiji Press)–Japan’s Financial Services Agency on Friday issued a business improvement order to Iwaki Shinkumi, including a 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. The FSA determined that the lender had serious deficiency in its management system and demanded the clarification of management responsibility. 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. The lender provided the funds after the antisocial forces offered to make a political organization halt its street demonstrations, the panel found. Iwaki Shinkumi head Shigeru Kanari apologized at a press conference in Iwaki the same day, and said that the cooperative plans to press criminal charges against former executives who were involved in the irregularities. In 2019, Seibu Shinkin Bank in Tokyo was ordered by the FSA to improve operations for its links with antisocial forces. The case of Iwaki Shinkumi may call the FSA’s supervisory responsibility over the lender into question. In 2012, after the March 2011 powerful earthquake and tsunami in northeastern Japan, the government pumped 20 billion yen of public funds, or taxpayer money, into the lender. Iwaki Shinkumi was also found to have 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 was imposed in May, after Iwaki Shinkumi was found to have concealed a significant amount of fraudulent loans over many years. END [Copyright The Jiji Press, Ltd.]