The Yen Stops Here

Imagine that after a junior officer in a Chase Manhattan Bank branch was caught with his hand in the till, Chairman David Rockefeller was hauled before Congress to apologize and given a 30% pay cut. It could never happen in the U.S., where responsibility only goes so far. But much the same thing has happened in Japan.

Yoshizane Iwasa, president of the Fuji Bank, which is Japan's largest, found himself held to account for an embezzlement by a minor loan officer in a Tokyo branch. Masao Suganuma, 41, was arrested for taking $5,270,000 through phony loans. Once word got out, President Iwasa was summoned before the finance committee of Japan's Diet to explain and apologize. Last week the bank's board, of which Iwasa is a member, cut the pay of Iwasa and other officers and directors by as much as 30% for the next six months. The directors canceled their own bonuses, totaling $72,000, for the two quarters ending in September. They decided that they had to share a collective responsibility for not having discovered the defalcation earlier.

Because of the embezzlement, the bank's profit for the two quarters came to only $30 million, down 1.3% from the same period last year. It was the first earnings drop in six years. Though all but $2,000,000 of the embezzled funds will eventually be recovered from Suganuma, members of Japan's financial community figure that the incident will continue to have a profound effect on Fuji Bank's leaders.

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