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A major Japanese credit company said yesterday it had lent money to yakuza gangsters in a widening scandal that is sweeping through the country's banking system.
The admission by JACCS, a unit of Japan's largest lender Mitsubishi UFJ Financial Group, is the latest in a growing series and comes as a government agency says it will buy shady loans to help companies keep their balance sheets clean.
A spokesman for JACCS said an inspection of its books had revealed several instances of it lending cash to figures with links to Japan's underworld.
"Those cases were found linked to antisocial individuals after the initial screenings," said the spokesman.
He refused to give an exact number, but admitted it was "more than one but still single-digit".
The scandal has gripped Japan's banking sector since Mizuho Financial Group came under fire in September for the revelation that it had processed hundreds of loans worth about US$2 million to mobsters.
A panel of lawyers hired by Mizuho to probe the transactions said last week that "many officials and board members were aware of, or were in a position to be aware of, the issue".
"However they failed to recognise it as a problem, believing that the compliance division ... was taking care of it," said the panel's 100-page report.
The company said 54 former and current executives would be punished, including Mizuho Bank chairman Takashi Tsukamoto, who would step down from his post but stay on as head of the parent company.
In the wake of that report, Japan's financial watchdog said it would probe the country's top three banks - Mizuho, Mitsubishi UFJ and Sumitomo Mitsui Banking Corporation - in an effort to weed out the practice of offering loans to the underworld.
Like the Italian mafia or Chinese triads, the yakuza engage in activities ranging from gambling, drugs and prostitution to loan sharking, protection rackets and white-collar crime.
The gangs, which themselves are not illegal, have historically been tolerated by the authorities, although recently efforts have been made to choke off their sources of funding.
Observers say the extent of the mob's reach into legitimate areas of finance is sometimes the result of officials looking the other way, but often a loan may be extended in good faith to someone who appears to be above board. It is only later that the individual's connection to organised crime is uncovered.
A state agency, the Deposit Insurance Corporation of Japan, began a scheme two years ago to help financial companies scrub their books of links to gangsters.
The agency buys the loans at a discount from the bank or credit card company, which must swallow the loss, while the state tries to recover the cash, an official at the Deposit Insurance Corporation said.
Since its introduction in 2011, the agency has bought debts worth nearly 300 million yen (HK$23.6 million). It has paid 11.7 million yen for them, he said.
In September, a total of 230 loans, mainly for buying cars, were revealed to have been made to gangsters by Orient Corporation, a consumer credit company financed by Mizuho.
Initially, Mizuho said only the bank's compliance officers had known about the loans, but later conceded that senior executives, including President Yasuhiro Sato, had also been aware of them.
This is not the first time evidence has emerged of underworld involvement in Japan's banking industry. In 1997 Dai-Ichi Kangyo Bank was found to have lent money to a group led by a racketeer, and several executives were arrested for paying him off.
Additional reporting by The Guardian


Mitsubishi UFJ credit card unit admits making loans to yakuza gangsters

Mitsubishi UFJ unit becomes latest company to admit making loans to yakuza. Photo: Reuters

Japanese banks regulator widens probe of links to yakuza

Japan's top lender Mitsubishi UFJ Financial Group is among the banks to be investigated for links to yakuza. Photo: Reuters

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Asia

Mitsubishi UFJ unit becomes latest company to admit making loans to yakuza; Mizuho led the way in September with loans worth US$2m


The admission by JACCS, a unit of Japan's largest lender Mitsubishi UFJ Financial Group, is the latest in a growing series and comes as a government agency says it will buy shady loans to help companies keep their balance sheets clean.
