A third-party panel investigating an illicit loan scandal at Suruga Bank Ltd. involving share house cheap lodging businesses concluded in its report announced on Sept. 7 that forgery and falsification of loan applications and related documents was "widespread" inside the regional bank based in the central Japan prefecture of Shizuoka, and "many employees" including an executive were "involved in the forgery."
The panel, led by lawyer Naoto Nakamura, pointed out in the report that the situation was "the responsibility of the management that was cut off from daily operations" of the financial institution, confirming that Chairman Mitsuyoshi Okano from the bank's founding family and five others neglected their responsibilities.
On the same day, Okano, 73, President Akihiro Yoneyama, 52, and three other senior executives resigned to take responsibility for the scandal. Director Michio Arikuni, 52, was consequently promoted to president.
The panel said that bank balance padding of would-be share house owners and rent revenue prospects to get loans for the purchase of share houses and secondhand apartments was "widespread" at the bank. Bank employees turned a blind eye to falsifications made by real estate agents, or even demanded changes to relevant papers with specific instructions.
As many as 795 cases of suspected falsifications were found after 2014, but panel members said that they gave up making precise estimates about the number and the total amount of illicit loans "because investigating was difficult."
The panel pointed out that former senior managing executive officer Haruo Aso and past senior officials were involved in the wrongdoing. Aso threatened employees screening loan applications who questioned the legitimacy of some of the loans, and intervened in personnel changes. He also strongly recommended that when loans are extended to share house owners, unnecessary other loans, savings deposit requests and insurance contracts should be bundled together, according to the panel. Up to 14 employees are suspected of receiving money from relevant businesses.
According to the panel, the sales objectives of Suruga Bank were set by top management, and forced employees to meet excessive performance requirements. The panel explained about the bank's emphasis on sales activities and disrespect for legal compliances that a former vice president who was effectively the decision maker was mostly responsible for. The vice president died in July 2016. Chairman Okano, President Yoneyama and other top managers "let executive officers handle the whole matter and avoided their involvement in daily operations, creating a division of information," the panel criticized.
(Japanese original by Takashi Narumi, Business News Department)