. Earth Science News .

Japan pension scandal shakes trust in cherished system
by Staff Writers
Tokyo (AFP) April 1, 2012

Trucking company president Masazumi Ando said he was furious when he saw the head of an investment firm that lost $1.3 billion in pension money bow in apology at a parliamentary hearing last week.

"This is nothing but a fraud," said Ando, whose 300 employees belong to a trucking-sector pension plan with $120 million in retirement savings that may now be gone for good.

"We are preparing to file lawsuits so that any cash that may be hidden overseas could be recovered," he told AFP.

Ando's sentiment may be widely shared amid the fallout from Japan's latest financial scandal, which has shaken trust in cherished private pension plans seen as crucial for millions in a country with a rapidly ageing population.

It also comes at a time when camera maker Olympus attempts to rebuild its own reputation following a $1.7 billion loss scandal by present and former top executives.

The problem at AIJ Investment Advisors goes beyond a cover-up -- analysts say the AIJ meltdown points to a serious problem with the deregulation of Japan's private pensions.

It also casts doubt on the future of small and medium-sized businesses if they cannot compensate about 880,000 employees who lost money in the scandal.

"Many of them are small businesses. They could collapse in a domino effect," said Hiroyuki Ozaki, a business professor at Tokyo University of Technology.

The spectre of such a collapse comes as Japanese firms, big and small, are already struggling to recover after last year's earthquake-tsunami disaster.

The stress is particularly acute for smaller firms that contribute more and more money to their pension plans, which tend to be generous in addition to Japan's national retirement scheme.

The fate of 109.2 billion yen ($1.3 billion) managed by AIJ was all but confirmed when president Kazuhiko Asakawa on Tuesday admitted wrongdoing, saying the company falsified its accounts to hide massive losses.

Asakawa told a parliamentary panel the money had disappeared in a string of risky bets on futures and options contracts between 2002 and 2011, but insisted he had not deceived clients since his plan included making the money back.

"I didn't want to use inflated figures for the pensions fund, but I did not want to come back with losses, no matter what," he told the panel in his first public appearance since the scandal surfaced in February.

"I was confident of recouping the losses," he added.

Regulators have so far found just 8.1 billion yen in accounts in Japan and Hong Kong, with one official saying some of the money may have been funnelled into offshore bank accounts, which Asakawa has denied.

His parliamentary appearance followed a raid on AIJ's Tokyo headquarters by securities regulators, which itself came after a January inspection of AIJ's books found it could not account for most of the funds under its management.

The Financial Services Agency halted the company's operations in February and then revoked its license as an asset manager in March.

No charges have yet been laid, but Mario Takeno, head of the Securities and Exchange Surveillance Commission, has said the watchdog may ask prosecutors to pursue criminal charges.

It has also been widely reported that former employees at the now-defunct Social Insurance Agency were hired at AIJ.

In 2007, the state agency that managed the public pension system admitted it could not find records for about 50 million accounts. The ensuing scandal contributed to the 2009 downfall of the long-ruling Liberal Democractic Party.

Yasuyoshi Masuda, a Tokyo University economics professor, said the wider problem was rooted in deregulation of the sector after Japan's booming economy headed south in the 1990s.

Authorities pushed for wide-ranging changes to stimulate the economy, easing rules for investment advisors looking to manage corporate pensions, he said.

"But following the deregulation, authorities failed to set up a system to impose penalties on almost fraudulent managers like this," Masuda told AFP, referring to AIJ.

"There is a flaw in the whole system," he said.

Related Links
The Economy

Get Our Free Newsletters Via Email
Buy Advertising Editorial Enquiries

China confident in Italy economy, stresses reforms
Beijing (AFP) March 31, 2012 - China's Prime Minister Wen Jiabao said Saturday Italy could return to economic growth as long as it implements reforms, speaking at a Beijing meeting with Italian counterpart Mario Monti.

"The Italian economy has solid foundations and potential. It can deal with the unfavourable international context and, thanks to the implementation of reforms, boost growth," Wen said.

"Italy considers China as a strategic partner," Monti said. "We can find new forms of cooperation, not only in our bilateral relations but also in multilateral relations."

The widely-respected technocrat, who replaced Silvio Berlusconi as head of the eurozone's third largest economy, was visiting China as Europe continues to stagger under the weight of runaway sovereign debt, led by Greece.

Italy alone needs some 750 billion euros to finance its debt, while Spain requires around 370 billion euros over the next three years.

"The Chinese government has encouraged its national businesses to increase their investments in Italy and it hopes that Italy will push the European Union to create a more open investment climate," Wen said.

China has been asking for a long time that it be recognised as a market economy by the EU -- this status would offer better guarantees of access to Chinese products on the European market.

Monti, a former European commissioner, is on a trip which has taken him to Japan and South Korea as he aims to get recession-struck Italy growing again after years of lagging behind its eurozone peers.

In Beijing, he said he wanted to generate new enthusiasm for his country, presenting a "new" Italy that is less bureaucratic and more open to foreign investment.

"My expectation was first of all to explain and to present (the new Italy) and from the reactions that we got I must say that is going in a satisfactory manner," said Monti.

Italy "wants to become and is becoming more disciplined, more deeply market economy-oriented and more business-friendly and a country firmly rooted in the EU."

He accepted there was a lot of work to be done, with the eurozone crisis not over, but added that "since the beginning of the Greek crisis, a huge progress has been achieved."


. Comment on this article via your Facebook, Yahoo, AOL, Hotmail login.

Share this article via these popular social media networks
del.icio.usdel.icio.us DiggDigg RedditReddit GoogleGoogle

Japan factory output falls, dents recovery hopes
Tokyo (AFP) March 30, 2012
Japan's factory output fell unexpectedly in February, data showed Friday, suggesting the recovery in the world's number three economy remained anaemic. The fall confounded expectations for a third straight increase, although officials pointed out that manufacturers expect the slowdown to be temporary. The 1.2 percent on-month decline in industrial production was triggered largely by slow ... read more

Filming in Chernobyl, the 'Land of Oblivion'

Japan eases Fukushima re-entry ban in some areas

NATO faulted over Libya boat-people deaths

Japan: Lessons learned from Fukushima

Dell buys 'cloud' computing company Wyse

Ultrafast laser pulses shed light on elusive superconducting mechanism

'Full-body' audit finds abuses at China Apple plants

ORNL process converts polyethylene into carbon fiber

Mud manifests history of clear water in murky Minnesota duck depot Lake Christina

Chinese fisherman killed in Palau shooting

TARA OCEANS completes 60 000-mile journey to map marine biodiversity

Marshall Islanders 'nomads' in own country: UN

PCBs levels down in Norwegian polar bears

Mammoth extinction not due to inbreeding

Energy requirements make Antarctic fur seal pups vulnerable to climate change

Increase in Arctic shipping poses risk to marine mammals

China's Tibetan herders face uncertain future

Some cool to tobacco industry research

Bacterial shock to recapture essential phosphate

DNA traces cattle back to a small herd domesticated around 10,500 years ago

Flood-ravaged Fiji struggles as cyclone bears down

Strong quake hits Mexico, no casualties reported

Flash floods cause havoc in Fiji

Flood-hit Fiji declares state of emergency

Regional group alerts troops after Mali fighting

Bodies, destroyed tanks at scene of Sudan battle: AFP

Mali coup leader trained with US military: Pentagon

Mali coup: Arab Spring spreads to Africa

In tech first, US puts entire 1940 census online

Discovery of foot fossil confirms two human ancestor species co-existed

Runner's high motivated the evolution of exercise

With you in the room, bacteria counts spike

Memory Foam Mattress Review

Newsletters :: SpaceDaily Express :: SpaceWar Express :: TerraDaily Express :: Energy Daily
XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News


The content herein, unless otherwise known to be public domain, are Copyright 1995-2012 - Space Media Network. AFP, UPI and IANS news wire stories are copyright Agence France-Presse, United Press International and Indo-Asia News Service. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement,agreement or approval of any opinions, statements or information provided by Space Media Network on any Web page published or hosted by Space Media Network. Privacy Statement