Word: daiwa
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...HEAR U.S. PROSECUTORS TELL IT, the stunts that Japan's Daiwa Bank used to conceal the nefarious conduct of its Manhattan office might have come from The Sting. The end result, however, was more akin to the farcical Dumb and Dumber. Among the flagrant ruses employed by Daiwa, prosecutors said, was disguising a downtown trading floor as a nondescript storage room during audits by Federal Reserve regulators. But no sooner had the Feds left than the traders reappeared--led by Toshihide Iguchi. It was his dual role as chief bond trader and bookkeeper that ultimately brought the bank to grief...
...bank's antics seemed right for a farce, their impact became the stuff of high drama last week when federal regulators gave Daiwa 90 days to pack up and leave the U.S. In a move coordinated with the regulators, a federal grand jury in New York City indicted the bank on 24 criminal counts of conspiracy and fraud connected with a cover-up of Iguchi's losses. That could lead to $1.3 billion in fines if the bank is convicted. Masahiro Tsuda, general manager of Daiwa's New York City office, was charged with taking part in a conspiracy with...
...bank, which contends that the Osaka home office was unaware of Iguchi's actions, responded with a mixture of contrition and defiance. Daiwa agreed to leave the 13 states where it has offices, which account for some 15% of the bank's international assets. But the president of Daiwa, Takashi Kaiho, lashed out at the indictments, calling them "very inappropriate," and vowed to fight the charges. At the same time, Kaiho said the bank would reappraise its foreign ventures and slash its work force from 9,600 to 7,000 employees...
...issue of bank regulation is a vital one in the wake of scandals at Britain's Barings Bank and Japan's Daiwa Bank. The biggest debacle of recent years was the 1991 collapse of the Bank of Credit and Commerce International, which cost depositors billions of dollars. Much of the blame was placed on regulators who seemed oblivious to B.C.C.I.'s frauds. No one is suggesting that this is another B.C.C.I. case in the making. When questioned about Investcorp's practices, its officials noted that the bank is licensed in Bahrain and is well supervised. "It's a very strong...
...distrust of Japanese banks on the international markets has diverse and deep roots, even as the Ministry of Finance is taking dramatic steps to clean up the mess. The Daiwa case has shown how shoddy management can be in at least one major Japanese bank. Daiwa and the ministry waited too long to notify the U.S. of the losses, and the bank used shell companies to hide losses. Last week officials at Daiwa's Osaka headquarters would say only that Iguchi was asked to carry on simply to "prevent him from escaping." As a whole, Japanese banks have failed...