The Yomiuri Shimbun
Former Liberal Democratic Party Secretary General Hidenao Nakagawa's former secretary, who is believed to have made financial gains with the help of an accountant involved in the former Goodwill Group Inc.'s corporate acquisition scandal, introduced a senior Financial Services Agency official in 2007 to a former construction company president who had dealings with the accountant, it has been learned.
The former president of the firm formerly known as Sennennomori Inc. in Minato Ward, Tokyo, and which changed its name to Toho Global Associates in April last year, allegedly asked the agency official whether the company's listed status on the second section of the Osaka Securities Exchange was at risk due to various problems the firm was facing. The president was told that the problems did not warrant OSE delisting under the agency's criteria.
The 51-year-old certified public accountant, who allegedly received about 18 billion yen from GWG in the acquisition of a temporary staff agency in 2006, used part of the money to buy Mobile Judge, a cell phone research company, at an unusually high price. The government-paid secretary, who previously had invested in Mobile Judge, then reportedly made 6.6 million yen by selling the company's shares.
It is believed the secretary rewarded the accountant for the profit by introducing the FSA official to the construction firm president.
The accountant also used part of the 18 billion yen to buy shares in the construction company, after which the president ran the company according to the accountant's instructions.
According to sources, the company started experiencing many problems beginning in September 2007. For example, the OSE criticized the company's unpreparedness in information disclosure, and the company's debts exceeded its assets in its midterm earnings report that year. The president became worried his company might be delisted, so he contacted Nakagawa's secretary through someone close to Mobile Judge. On the afternoon of Nov. 19 that year, he met the secretary to discuss the matter at Nakagawa's office at the Diet members' office building in Chiyoda Ward, Tokyo.
On the same day, the secretary introduced the president to the senior FSA official, who agreed to meet the president at the agency. At their meeting, which also was attended by another agency official in charge of the issue, the senior official reportedly told the president that his company's case did not warrant delisting and that he should consult the OSE if he was still worried. When the president subsequently visited the OSE to explain his company's situation, he apparently showed the senior FSA official's business card, saying the official was his acquaintance.
It is quite unusual for a senior FSA official, whose agency supervises the nation's stock exchanges, to be consulted with a firm on its potential delisting.
The senior agency official admitted he met the president and Nakagawa's secretary.
"My understanding was that he [the president] wanted my opinion on the criteria for delisting a company. I had known the secretary for a long time, but if his request had been to speak to the stock exchange about the case, I wouldn't have agreed to the meeting," the senior agency official said.
The secretary, who retired from Nakagawa's office in December, said he did not remember the case very well.
In a statement, Nakagawa's office said: "We hear it was not a consultation on how to avoid delisting but just on which documents were needed for the process. It would be regrettable if it invited misunderstanding."
At one point, the accountant acquired about half of the construction company's outstanding stock issues, using the money he acquired from GWG. But it is believed he later sold most of the shares.
(Feb. 2, 2009)
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