In a deepening scandal involving payoffs to a corporate racketeer, Tokyo prosecutors today arrested the former president of Yamaichi Securities Co., a major Japanese brokerage.
The move followed the arrests last month of five brokerage officials accused of illegally funneling profits to Ryuichi Koike, a suspected racketeer.
Prosecutors from the Tokyo District Public Prosecutors Office arrested the former Yamaichi president, Atsuo Miki, after questioning him earlier in the day about the scandal. Kyodo News service said several prosecutors at the same time raided the home of the 62-year-old Miki to gather evidence.
An official at the office said Miki helped Koike rake in illegal profits in conspiracy with the other five Yamaichi officials.
Miki, who had resigned as Yamaichi president on Aug. 11 because of the scandal, was suspected of having endorsed a total of $658,000 in payments that were transferred in 1995 to an account held by Koike's younger brother, prosecutors said.
The Securities and Exchange Surveillance Commission, Japan's securities watchdog, suspects the payments were compensation for investment losses in a profit-guaranteed "VIP" account Yamaichi maintained for Koike.
The prosecution official said Yamaichi generated the profits through Nikkei futures trading on 22 occasions between Jan. 11 and Jan. 31, 1995, on the Singapore International Monetary Exchange.
The compensation for investment losses was a "reward" for Koike's part in helping ensure that the June 29, 1995, Yamaichi shareholders' meeting proceeded smoothly, the official said.
Prosecutors have raided Yamaichi's headquarters in Tokyo as well as the homes of senior company officials. Miki and 11 other Yamaichi executives resigned over the scandal last month.
Koike has been arrested and accused of extorting money in the same way from other Japanese brokerages, including Nomura Securities Co. and Daiwa Securities Co., and obtaining shady loans from Dai-Ichi Kangyo Bank.