It’s not only American banks that have seen legal trouble for loans the bank shouldn’t have given. More than 30 executives from the Japanese Mizuho Bank could face punishment for accepting loans for known members of criminal organizations.

On Sept. 27, the Financial Services Agency (FSA) issued an operations-improvement order to Mizuho, claiming that the bank did not take any necessary actions to cancel the existing loans. According to The Wall Street Journal, the bank had around 230 transactions with criminal groups such as the yakuza, totaling around ¥200 million ($2 million).

As a result of the investigation, Yasuhiro Sato, Mizuho Bank’s president, will be docked six months pay. Takashi Tsukamoto, the bank’s chairman, will step down from his current position, although he will stay on board with parent company Mizuho Financial Group Inc. Former President Satoru Nishibori, meanwhile, will be asked to return part of his salary retroactively.

“We consider this problem to be very regrettable, and we want [Mizuho] to take steps immediately to improve its operations and run its businesses in a proper way,” Bank of Japan Gov. Haruhiko Kuroda said in early October, according to the WSJ. “I believe it is necessary for them to appropriately fulfill their responsibility to explain” their actions.

Mizuho says most of the loans given to criminal groups were for automobiles through the bank’s consumer loan unit Orient Corp. According to the bank, these loans were active for more than two years.

Top-level management for Mizuho had previously claimed that they were not aware of any wrongdoing, but Sato claimed in early October that he had actually become aware of the problem in 2011. He also stated that Nishibori had received the reports as early as 2010.

Mizuho is expected to release the results of an independent investigation on Oct. 28. The bank is also expected to release a business improvement program in the coming days.


Which other financial institutions are getting into legal trouble? See these InsideCounsel stories to find out:

Countrywide found liable for selling defective loans

Investment firms settle with SEC for ignoring compliance programs

FHFA seeking $6 billion from Bank of America in mortgage crisis settlement

J.P. Morgan closing in on agreement with DOJ over mortgage probes

$2.46 billion payment ordered in 11-year old securities fraud case