Analysis: The AIJ scandal and Japan's pension time bomb
News On Japan via Reuters -- Mar 20
Tarumi Taxi in western Japan's port city of Kobe is teetering on the brink of bankruptcy, offering a glimpse of the crisis facing tens of thousands of small and mid-sized companies across Japan with little hope of meeting their pension obligations.
Owner Satoshi Nagata, 59, has been pressing banks for a loan before a deadline in September when a contractual trigger will quadruple the hole in the firm's pension account. Without it, Tarumi Taxi and its fleet of 40 cars and 80 drivers will likely fold.
"We've been in the red every year since 2007. The additional funds needed for this pension installment is killing our business. I've sold everything from stocks to golf memberships to keep us afloat," said Nagata, sitting on a torn sofa on the second floor of the old wooden building that has served as company headquarters for half a century.
"I'm talking with banks now in preparation to make the repayment by the end of August. But if I can't then we'll be in serious trouble."
Nagata didn't invest in AIJ Investment Advisors, the Tokyo-based advisory firm at the centre of a $2 billion fraud that came to light late last month. But he says he knows why other pension funds struggling to meet the obligations for their growing ranks of retirees would.
"We're not involved in AIJ but I can understand why they invested in this kind of high-yielding instrument," Nagata said.
In one of Japan's worst financial scandals, AIJ is under investigation for falsifying performance records on roughly 200 billion yen ($2.4 billion) in pension money. Nearly all of that is believed to have disappeared, dealing a blow to the 84 pension co-operatives representing 880,000 employees that entrusted it with funds.
The financial regulator, under fire for failing to prevent the scandal, has launched an investigation into all 265 discretionary asset managers in Japan. Politicians are considering regulations such as limiting risky investments and safety-net measures to support ailing pension funds.
But new rules and inspections will do little to help the legions of pension funds already nursing big shortfalls and failing to meet annual return targets of up to 5.5 percent, realistic decades ago when they were set but no longer probable in an era of zero interest rates and deflation.
This Monday, members of the seminal metal band X Japan were in Odaiba rubbing shoulders with the likes of Brad Pitt, Lady Gaga and AKB48′s Yuko Oshima. The catch? They were all made out of wax. (Japan Times )
The parents of a nightclub worker killed in an arson fire three years ago filed a suit in the Nagoya District Court on Monday seeking damages against top members of the Yamaguchi-gumi organized crime group. (Tokyo Reporter )
Kyodo News said Monday that it has dismissed Satoshi Kondo, 51, deputy chief of its general administration bureau and former personnel affairs division chief, for meeting individually with a female student searching for a job and doing an inappropriate act.
(Jiji Press )