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Japanese mogul to face the music

This file photo dated 13 October last year shows Yoshiaki Tsutsumi bowing as he resigns as chief of all of his group companies over a false declaration on stockholdings. PHOTO: AFP

Yoshiaki Tsutsumi, who was reputed to be the world's richest man at the end of Japan's "bubble economy," will be indicted for allegedly lying in financial reports and insider trading when he headed the Seibu property, retail and railway empire, reports said yesterday.

Investigators will go to Seibu Railway group offices this week and press charges against current Seibu executives as well as Tsutsumi, 70, Kyodo News said.

Tsutsumi, who was chairman of Kokudo Corp, the railway company's parent, will be questioned by prosecutors on his role in a statement which allegedly underreported holdings of major shareholders, the Nihon Keizai Shimbun business daily said.

The executives are also suspected of massively selling Seibu shares before admitting the under-reporting scandal in October, a move that made Seibu nosedive and led to its delisting from the Tokyo Stock Exchange.

Tsutsumi, whose family bought up property as Japan rebuilt after World War II, was named as the world's richest person by Forbes magazine in 1990 with a fortune put then at US$16 billion. Last year, he was ranked 159th with just US$3 billion.

In October, Tsutsumi quit as chairman of companies which included the Prince Hotel, Seibu Construction and Kokudo to take responsibility in the scandal.

Two people have committed suicide over the scandal, including former Seibu Railway president Terumasa Koyanagi, 64, who was found hanged in his Tokyo home last month.

Before killing himself, Koyanagi admitted to prosecutors that a Kokudo executive told him to lie about the financial statement and alleged the order came directly from Tsutsumi, Fuji Television reported.

In June, the Seibu group had told authorities that Kokudo's shareholding in Seibu Railway was 43.16 percent even though Kokudo actually held a 64.83 percent stake, previous reports have said.

As a result, the group was able to hide the fact that the top 10 major shareholders held more than 80 percent of the group -- a criteria for delisting from the Tokyo market, reports have said.

Between August and October, Seibu executives and Tsutsumi sold some ¥65 billion (US$625 million) in Seibu Railway shares held by Kokudo to 72 companies and individuals in off-market transactions to bring down the level of shareholdings, the Yomiuri Shimbun said.

The deals were made prior to the October disclosure of the financial statement and prosecutors have determined that it constituted insider trading, the Mainichi Shimbun said.
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