Japan Brokerages Suspected of Guaranteeing Profits : Scandal: An official of the Finance Ministry claims that brokerages’ favored clients were compensated even when they didn’t suffer losses.

A Finance Ministry official said Monday that brokerages compensated dozens of favored clients even though they didn’t suffer market losses, raising suspicions that a certain investment profit might have been guaranteed.

Nobuhiko Matsuno, head of the Finance Ministry’s Securities Bureau, cited 59 cases in which such compensation may have been paid.

He said the ministry was investigating whether Japan’s four biggest brokerages--Nomura, Nikko, Daiwa and Yamaichi--had promised profits in advance, which is illegal.

“Those (59) cases did give us such an impression, although we cannot immediately determine that those cases all involved profits promised in advance,” local newspapers quoted Matsuno as saying.

Matsuno spoke before a special committee of Parliament investigating the scandal, in which more than 20 Japanese brokerages made paybacks worth about $1.3 billion to about 600 favored clients.

The ministry previously had said all the compensation was for market losses and was not illegal unless promised in advance, something the brokerages have strenuously denied.

Matsuno did not name the brokerages or the clients suspected of involvement in possible guaranteed profits.

In a front-page analysis Monday, the nationally circulated newspaper Asahi Shimbun questioned the alleged practice: “The ministry has previously denied any evidence of prior promises for profit or compensation for losses . . . but how can there be cases of securities firms making payments when there were no trading losses without any guarantee of profit?”

Matsuno said the ministry also was looking into cases of compensation paid by the Big Four brokerages after March, 1990.

Pressured by the Finance Ministry, 21 brokerages provided reports of compensation that included paybacks only up to March, 1990.

Legislators had been pressing for the disclosure of compensation made after March, 1990, when share prices on the Tokyo Stock Exchange took their biggest plunge.

Nomura officials have repeatedly denied any compensation after March, 1990.

Last week, former top executives of Nomura and Nikko denied at parliamentary hearings that they had violated any laws, and suggested that the government and their clients bore some blame for the compensation scandal.

Meanwhile, in another financial scandal involving major banks, prosecutors said Monday that they filed formal charges against a restaurateur and a former bank official for allegedly using forged bank deposit certificates to obtain billions of dollars in loans.

Osaka district prosecutors in western Japan charged Nui Onoue, 61, and Tomomi Maekawa, a former manager of Toyo Shinyo Kinko, an Osaka-based credit association, with fraud and forging documents. The two were arrested in mid-August.

Onoue is charged with using fake certificates as collateral to obtain about $2.6 billion in loans from more than 10 financial institutions, including the Industrial Bank of Japan and Fuji Bank.

Prosecutors also arrested Yoshiaki Ariki, 34, an employee of National Leasing Co., a medium-size lending subsidiary of Matsushita Electric Industrial Co., for allegedly causing losses worth $365 million to National Leasing by helping Onoue use fake certificates as collateral.

Ariki was suspected of helping Onoue replace securities such as bonds and stocks with two forged certificates carrying a face value of $584 million.

News reports said prosecutors were also investigating Industrial Bank of Japan for allegedly accepting four fake certificates from Onoue and lending her up to $1.8 billion, as well as Yamaichi Securities, said to be her adviser.

Onoue, once considered Japan’s largest individual stock investor, was believed to have suffered financial problems in part because of last year’s sharp drop in stock prices.