The Diet is preparing to summon Mizuho Financial Group president and CEO Yasuhiro Sato next week to give testimony over the bank's failure to crack down on loans to yakuza criminal gangs.
The financial affairs committee of the lower house will start hearing testimony from Sato and other bank executives on Nov 11, Fuji TV reported Monday.
Mizuho announced last week that Sato will give up six months of pay but remain at his post. The bank also is appointing Tatsuo Kainaka, a former prosecutor and Supreme Court judge with a reputation for toughness, to be its chief compliance officer. Besides the exit of chairman Takashi Tsukamoto, Mizuho's top compliance officer and its risk management director resigned Nov 1. Dozens of Mizuho employees face salary cuts.
The Diet committee is expected to press Sato on why Mizuho was so lax in cleaning up more than 200 million yen, mostly auto loans, to clients associated with "anti-social" elements, a euphemism used by Japanese media for yakuza.
Senior Mizuho executives neglected to clean up the loans after discovering them in early 2011.
Mizuho has already presented a plan for an overhaul to the Financial Services Agency, which demanded that the bank devise a strategy for "improvements" to its lending business.
The bank has pledged to end the loans, step up anti-mob screening of incoming business, tighten corporate governance and improve internal awareness about preventing dealings with those linked to organized crime.
The troubles at Mizuho underscore the difficulties financial companies confront in avoiding dealings with yakuza gangs. They are entrenched in many areas of the economy despite efforts to freeze them out of the financial system.
The Diet panels is expected to question Sato on Mizuho's corporate governance, a perennial problem highlighted by a stream of scandals over negligence, fraud and other troubles at some of Japan's most elite companies.© Japan Today/AP