Court looms for Sogo boss

Shoppers, and Japan at large, were shocked by Sogo's collapse

The former head of the department store which filed for bankruptcy in Japan's biggest corporate collapse may be prosecuted, investigators have said.

Hiroo Mizushima, who stood down as chairman of Sogo stores two months before it revealed debts of 1,870bn yen (£11.8bn), will discover by the end of the year if he is to face court action, special administrator Shigeaki Wada said.

The collapse, which followed a troubled international expansion programme led by Mr Mizushima, dealt a huge blow to Japan's economic confidence, and is thought to have prompted central bankers to delay a rise in interest rates.

"We will sue people whom we should, and we will punish internally those whom we should," said Mr Wada, a former chairman of rival store chain Seibu, who described Sogo's former management practices as "abnormal".

Parliamentary questions

The statement comes three weeks after Mr Mizushima appeared before a committee of the Japanese parliament to answer questions over the collapse.

The department store, which employed 10,000 people at the time of the collapse, in July filed for court protection from creditors after it failed to get a loan from the government.

But the Industrial Bank of Japan (IBJ), one of Sogo's main creditor with 236bn yen (£1.5bn) of loans, has begun legal action to seize Mr Mizushima's personal assets, said by Japanese newspapers to exceed 1.5bn yen (£9.4m).

The newspapers say that Mr Mizushima, whose relationship with Sogo dates back to the 1960s, is a personal guarantor of the IBJ loans.

Flagship shop to close

Sogo's acting president, Yoshitsugu Sakata, said the firm would be withdrawing from its international operations as part of a rescue plan, which will also close the group's flagship shop in Tokyo.

"We are already in the process of selling or transferring overseas outlets to local institutions," Mr Sakata said.

A tie-up between Sogo and Seibu, which had been rumoured, is not planned, Mr Wada said.

"The project is to revitalise Sogo," he said. "We will rely on support from Seibu, but there is no move to consolidate with Seibu."

Sogo's store in Taiwan would continue under local owernship.