Bloomberg reports that the Financial Services Agency will be investigating Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. to ensure that they are following compliance policies intended to prevent business transactions with organized crime groups.
This probe follows the discovery that the nation’s second biggest lender, Mizuho Financial Group Inc., provided loans to yakuza gangs in 2011. According to Time, these transactions were completed by the company’s affiliate, Orient Corp., and were reported to Mizuho’s board. However, no action was taken at that time.
The case has highlighted leniency towards organized crime. Membership in a crime syndicate is not a crime under Japanese law, reports the Chicago Tribune, and certain groups have even registered offices with local officials.
According to The Japan Times, the yakuza are known for their involvement in prostitution, extortion, and the drug trade. Authorities are now trying to more aggressively pursue gangsters in Japan, a move which the Chicago Tribune says may have encouraged mobsters to shift their focus to the financial sector.
Mizuho Bank president Yasuhiro Sato said he will not step down from his position because of the lending scandal, but he will forego his salary for the next six months. According to Sato, the “problem was that we weren’t aware or sensitive enough to loans that were being done by an affiliate company,” reports the GlobalPost.
Finance Minister Taro Aso, meanwhile, has said that Mizuho’s claims of ignorance are “the worst thing a bank can do.”
This is not the first time Mizuho has been linked with lending to organized crime groups. According to the Chicago Tribune, Mizuho absorbed the Daiichi Kangyo Bank in 2000, a bank that three years earlier provided loans to a member of the “lesser cousins of the yakuza,” the sokaiya.
