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Wednesday, 20 September, 2000, 12:30 GMT 13:30 UK
Bank bosses pay $775m fraud charge
Daiwa Bank logo
Daiwa Bank: Shareholders win court case against executives
By the BBC's Damian Grammaticas in Tokyo

A group of senior executives at a Japanese bank have been ordered to pay more than $750m (535m) in compensation for losses incurred during fraudulent trading.

The executives from Japan's Daiwa Bank failed to prevent one of their employees losing huge sums of money over a period lasting more than a decade.

The award is the largest ever made to shareholders by a Japanese court.

The trader, Toshihide Iguchi, lost more than $1bn of the bank's money in fraudulent trading over 11 years from 1984 onwards.

Trader jailed

In 1996, Mr Iguchi, who was a bond trader at Daiwa Bank's New York office, was convicted and jailed in the United States.

Daiwa Bank paid fines of $340m, and closed its American operations, after being sued by US authorities.

Now a court in Daiwa's home town of Osaka in Japan has decided that 11 senior executives at the bank bear responsibility for their failure to supervise staff and detect the fraud, as well as their conspiracy to cover up the losses when they did come to light.

"The risk management mechanism at the (New York) branch was effectively not functioning," presiding Judge Mitsuhiro Ikeda told the court.

Shareholders' anger

The case was brought by two Daiwa Bank shareholders.

The executives have been ordered to repay a total of $775m in damages to their own bank.

The bulk of the award has been made against the former president of Daiwa Bank's New York branch, Kenji Yasui, who has been told to pay more than $500m.

Lawyers for the executives are reported to have said they will appeal against the ruling.

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