Credit Suisse under increasing pressure in Japanese courts

Japanese police investigators arriving to raid the offices of Credit Suisse Financial Products in Tokyo Keystone

Japanese prosecutors have demanded that a subsidiary of the Credit Suisse financial services group be ordered to pay a 50 million yen (SFr747,270) fine for systematically trying to obstruct a government inspection.

Under scrutiny is Credit Suisse Financial Products, a derivatives trading company based in London.

If the Tokyo district court upholds the demand, CSFP would become the first foreign bank to be found guilty of criminal charges in Japan.

Japan’s industry watchdog, the Financial Supervisory Agency (FSA), last year stripped CSFP of its business licence, one of the harshest punishments ever imposed against a foreign firm.

It was accused of helping clients to conceal losses by bouncing them between accounts, possibly using derivatives transactions.

Prosecutors said the bank had tried to hide documents from inspectors sent by the FSA, who raided the company in January 1999.

CSFP staff secretly shredded papers and sent a large number of boxes containing important documents to its London headquarters late at night on the first day of the raid, the prosecutors added.

CSFP has insisted in court hearings that such actions were done at the initiative of individuals and that the bank had never ordered staff to conceal documents.

Prosecutors rejected this argument, saying a junior staff member had given testimony that the head of the CSFP Tokyo branch, who was a board member, actually checked documents, selecting what could or could not be disclosed.

Prosecutors accused CSFP of trying to escape responsibility and called for harsh punishment.

“At a time when transparency is needed in financial businesses to ensure the health of the financial system, government inspections must be effective. Tough action must be taken,” a prosecutor told the court.

The maximum fine for obstructing a government inspection is 200 million yen. A spokesman for CS group in Tokyo declined to comment on the case.

The former head of the Tokyo branch, Shinji Yamada, was arrested in November last year and has been charged with criminal responsibility in the case.

Prosecutors called on the court on Monday to impose a four-month prison term. The maximum sentence is one year.

Yamada left CFSP last year after the inspection but said he received about one billion yen as a retirement allowance.

Recently, the FSA has punished a string of high-profile foreign firms for offences ranging from illegally selling products to helping clients to hide losses on illegal stock transactions.

swissinfo with agencies