New Japanese Agency Punishes 9 Banks, 4 Brokerages

Cracking down on corruption in Japan’s financial industry, a new watchdog agency handed out penalties to nine major banks and four brokerages whose employees were accused of wining and dining public officials.

The Financial Supervisory Agency announced Friday that it is banning Sanwa Bank from mutual fund sales for one year. It imposed lesser penalties on the other banks and brokerages.

The agency was set up in June to root out widespread corruption in the financial industry. It took over the role of supervising the industry from the Finance Ministry.

In its first major action, the agency suspended Sanwa from mutual fund sales at its branches for one year, starting Monday. During the suspension, the bank is also prohibited from taking advantage of recent deregulation to establish a holding company structure for its operations.

Earlier this year, a Sanwa employee allegedly bribed central bank officials to obtain information about government inspections of other banks, as well as information about the central bank’s target range for short-term interest rates, the agency said.

A Bank of Japan official and several Finance Ministry officials were arrested this year for allegedly accepting bribes.

The string of bribery scandals involving Finance Ministry and central bank officials tarnished the image of Japan’s bureaucrats, forcing the government to enact a new law to tighten ethics.