Japan arrests former manager of Credit Suisse unit

In the strongest action taken in relation to a foreign financial firm in Japan, police on Wednesday arrested a former manager of Credit Suisse First Boston's Tokyo unit on suspicion of violating banking laws.

In the strongest action taken in relation to a foreign financial firm in Japan, police on Wednesday arrested a former manager of Credit Suisse First Boston’s Tokyo unit on suspicion of violating banking laws.

Police said Shinji Yamada, former head of the local branch of Credit Suisse Financial Products, was arrested on suspicion of obstructing an inspection by financial authorities.

It is the first arrest in Japan of an official of a foreign bank for allegedly obstructing inspections by the Financial Supervisory Agency, the industry watchdog.

Separately, the Agency filed criminal complaints against the Japanese units of Credit Suisse Financial Products and Credit Suisse Trust and Banking Co, as well as five officials at the two branches, Kyodo news agency said.

Agency regulators had been looking into whether Credit Suisse Group firms in Tokyo were engaged in irregular transactions to help clients conceal losses by bouncing them from one account to another, possibly using derivatives transactions.

Yamada is suspected of concealing evidence by shredding documents and instructing employees to “remain silent” during an inspection in January, according to Japanese media reports.
Yamada, who was fired over the scandal in May, faces up to a year in prison or a fine of up to three million yen ($28,300) if convicted.

A spokesman in Tokyo for the Credit Suisse Group, which is Switzerland’s second-largest international banking group, said it was inappropriate for the company to comment on the arrest.

He also said the company had nothing to add to earlier statements it made in July, when it said some employees had taken it into their own hands to shred documents, thinking they were covering up potential fire-wall violations.

It said it had informed Japanese financial regulators of its employees’ actions, commissioned a report into the incident and made a public apology to Japan and the Agency, and that Credit Suisse Financial Products was losing its licence.

(Reuters)