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Last Updated: Thursday, 3 March, 2005, 13:25 GMT
Japanese mogul arrested for fraud
Yoshiaki Tsutsumi
Mr Tsutsumi was the world's richest man for four years until 1990
One of Japan's best-known businessmen was arrested on Thursday on charges of falsifying shareholder information and selling shares based on the false data.

Yoshiaki Tsutsumi was once ranked as the world's richest man and ran a business spanning hotels, railways, construction and a baseball team.

His is the latest in a series of arrests of top executives in Japan over business scandals.

He was taken away in a van outside one of his Prince hotels in Tokyo.

Fall from grace

I felt enormous pressure when I dined with him and it was nothing but pain
Yoshiaki Tsutsumi, speaking of his father

There was a time when Mr Tsutsumi seemed untouchable.

Inheriting a large property business from his father in the 1960s, he became one of Japan's most powerful industrialists, with close connections to many of the country's leading politicians.

He used his wealth and influence to bring the Winter Olympic Games to Nagano in 1998.

But last year, he was forced to resign from all the posts he held in his business empire, after being accused of falsifying the share-ownership structure of Seibu Railways, one of his companies.

Breaking the rules

Under Japanese stock market rules, no listed company can be more than 80% owned by its 10 largest shareholders.

Now Mr Tsutsumi faces criminal charges and the possibility of a prison sentence because he made it look as if the 10 biggest shareholders owned less than this amount.

Seibu Railways has been delisted from the stock exchange, its share value has plunged and it is the target of a takeover bid.

Mr Tsutsumi's fall from grace follows the arrests of several other top executives in Japan as the authorities try to curb the murky business practices which were once widespread in Japanese companies.

Untimely deaths

The scandal at Seibu has apparently already claimed two executives' lives.

The former president of Seibu Railway hanged himself last month.

According to the AP and AFP newswires, Terumasa Koyanagi, 64, a former president of Seibu Railway, claimed he had been asked to lie about Seibu's finances by an executive of Kokudo, its biggest shareholder.

A Kokudo executive also took his own life in November.

If found guilty of insider trading, Mr Tsutsumi could get three years in jail or a fine of up to three million yen, or both.

If he is charged with lying in financial statements, the penalty is five years in jail or up to five million yen.

Seibu is said to have fabricated hundreds of individual shareholders, who were said to own shares that in fact were owned by Kokudo.

Tough at the top

We'll do our best to become a transparent company which can be trusted
Seibu Railway

Mr Tsutsumi's determination to stay at the top at all costs may have had its roots in his childhood.

The illegitimate third son of a rich father, who made his money buying up property as Japan rebuilt after World War II, he has described the demands his father made.

"I felt enormous pressure when I dined with him and it was nothing but pain," Mr Tsutsumi told a weekly magazine in 1987.

"He scolded me for pouring too much soy sauce or told me fruit was not for children. He didn't let me use the silk futon, saying it's a luxury."

There have been corporate governance issues at some other Japanese companies too.

Last year, twelve managers from Mitsubishi Motors were charged with covering up safety defects in their vehicles and three executives from Japan's troubled UFJ bank were charged with concealing the extent of the bank's bad loans.

Seibu Railway said in a statement that it deeply regretted recent developments.

"We'll do our best to become a transparent company which can be trusted," it said.

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