Yakuza banking scandal extends to MUFG and Sumitomo

In Other News - October 30th, 2013
Mizunodragon

Three major Japanese banks will come under scrutiny in a broadening probe into possible transactions with organized crime groups.

Mitsubishi UFJ (MUFG), Mizuho and Sumitomo Mitsui Financial Group Inc (SMFG) were given notice on Tuesday of the inspections, the Financial Services Agency, Japan’s financial watchdog, said.

FSA inspectors will investigate whether the banks had dealings with people linked to Japanese gangsters, known as the yakuza. The probe will also focus on compliance practices and risk management systems, officials from the agency said.

The widened inquiry came after Mizuho Financial Group, the third-largest bank in Japan, was revealed to have 200 million yen worth of transactions with people tied to organized crime.

The company said 54 former and current executives will face punishment for failing to address the shady loans which went unresolved for more than two years.

Mizuho Bank President Yasuhiro Sato will be subjected to a half-year suspension in pay, while Satoru Nishibori, who was president when Mizuho became aware of the issue in 2010, will be asked to voluntarily turnover part of his salary.

An external probe cleared the bank of intentionally covering up the loans but said that Mizuho failed to recognize it as a problem, believing that the compliance division “was taking care of it.”

By Maesie Bertumen

Image: MShades/Flickr