Japanese Bank Says It Loaned Billions to Scandal Figure : Finance: Nui Onoue, a restaurateur who claims to get her stock tips from God, allegedly used $2.48 billion worth of phony deposit certificates as collateral to borrow money from the institution.
The Industrial Bank of Japan may be the key victim of a multibillion-dollar fraud involving a restaurateur and stock speculator who claims to get her financial tips from God.
The IBJ admitted Wednesday that it loaned large sums of money to Nui Onoue, 61, who was arrested Tuesday on suspicion of using $2.48 billion worth of phony deposit certificates as collateral to borrow money.
A credit officer from Toyo Shinkin Bank in Osaka who forged the certificates for Onoue was also arrested Tuesday.
The IBJ declined to confirm press reports that it loaned $730 million to Onoue while its subsidiaries, including Kogin Lease, loaned her $1.4 billion. A bank official, however, said the bank had been dealing with Onoue for four years and had granted her “large” loans. “We thought she was a trustworthy client,” the bank official said.
Onoue is the largest individual shareholder of IBJ and Dai-Ichi Kangyo Bank, is a top shareholder of Nippon Telegraph and Telephone Corp. and is regarded by some as Japan’s most active single stock trader.
She has been quoted in the Japanese press as saying “God” advised her on what company shares to buy. The Yomiuri Shimbun, Japan’s largest daily, however, reported today that Onoue was forced to borrow the money in the alleged schemes to cover $1.48 billion in stock market losses.
Tomomi Maekawa, the Toyo Shinkin Bank officer arrested Tuesday, admitted to issuing 13 fake certificates of deposit to Onoue between October and April. He told police he was afraid of losing Onoue as a valued customer. The phony certificates he issued came close to equaling the bank’s $2.7-billion deposit base.
The head of a branch office of Daishinpan Co., an Osaka-based consumer credit union, was arrested Wednesday on suspicion of illegally returning to Onoue $74 million worth of bonds she had handed to the bank as collateral.
It is unclear how Onoue was able to persuade bank officers to break banking regulations for her benefit. However, there are widespread media reports that gangsters frequented Onoue’s restaurants and that they may have been involved in the fraud.
According to one report, IBJ called back some of its loans to Onoue after hearing of her ties to the Yamaguchi-gumi, Japan’s largest crime syndicate.
The Industrial Bank of Japan, originally established as a pseudo-government institution, is still considered to have close ties with the government and to lend money to companies favored under government industrial targeting policies. Analysts say the incident could tarnish its reputation as a solid, conservative bank.
“I was sure we wouldn’t be involved in all this scandal,” one Tokyo official of the bank said.
Fuji Bank, the biggest victim until the Onoue scandal broke, saw its credit ratings fall after a similar case in which one of its bank officers allegedly forged certificates of deposit worth $1.9 billion for customers to use as collateral. Two other major banks, Tokai Bank and Kyowa Saitama Bank, have also been recently involved in such cases of alleged fraud.
The Bank of Japan and the Ministry of Finance both issued statements Tuesday promising support to banks involved in the scandal to prevent a run on the banks. They also demanded that financial institutions take a closer look at the certificates of deposits they hold as collateral to ascertain their authenticity.