Daiwa Bond Trader Has His Say Toshihide Iguchi


By Velisarios KattoulasPublished: WEDNESDAY, JANUARY 8, 1997

TOKYO: In a book written from his jail cell, the former Daiwa Bank trader at the center of a $1.1 billion bond scandal in New York turns the tables on his accusers, portraying Japanese and U.S. banking regulators as inept and accusing his former employer of complicity for trying to hide his illegal acts.

In the book, Toshihide Iguchi insists that U.S. and Japanese regulators and Daiwa Bank Ltd. were heaping all the blame for the scandal on him when they, too, were responsible. Last month, a U.S. judge confiscated Mr. Iguchi's home, fined him $2.6 million and sentenced him to four years in jail.

In early 1994, Mr. Iguchi writes in "The Confession," Finance Ministry regulators visiting the bank's New York branch, where Mr. Iguchi was head bond trader, finished in one day inspections that were supposed to last one week. The regulators then visited Las Vegas on their way back to Japan, Mr. Iguchi writes.

In 1992, he writes, U.S. Federal Reserve Bank regulators, one smelling strongly of alcohol, finished in 15 minutes inspections that were supposed to last two days while Daiwa Bank tried to hide Mr. Iguchi's suspicious trades by filling its New York trading room with cardboard boxes so regulators would think it was for storage.

Mr. Iguchi contends that examiners from the U.S. central bank suspected improprieties at Daiwa as early as 1993. The scandal strained ties between Japan and the United States after U.S. regulators accused their Japanese counterparts of withholding knowledge of the illicit trades for nearly two months after they had been told about it by Daiwa, Japan's 10th-largest commercial bank.
Japanese regulators and Daiwa Bank executives did not immediately respond to the allegations in the book. A spokesman for Daiwa Bank, Keizo Tsujiyama, told Bloomberg Business News that the bank was not consulted on the project.

A spokeswoman for the Federal Reserve Bank of New York said Tuesday the bank had no comment on Mr. Iguchi's assertions.

The book was written by Mr. Iguchi on loose sheets of paper in a Manhattan jail while he was awaiting trial after confessing to incurring $1.1 billion in losses on illegal bond trading, according to the publisher, Bungei Shunju, which will release the book for sale on Jan. 16. Excerpts were provided to reporters on Tuesday.

Bungei Shunju declined to disclose how much it had paid Mr. Iguchi for his story but said authors commonly received about 10 percent of sales as royalties for such books and that the initial printing would run to 40,000 copies at 1,500 yen ($12.96) each

The book is an account of how Mr. Iguchi, 45, incurred and then hid the losses on U.S. Treasury bond trading during an 11-year period starting in 1984, Bungei Shunju said.

It also delves into the activities of U.S. and Japanese regulators and Daiwa Bank executives, to which Mr. Iguchi is said to have become familiar after the Fed asked him to read and translate 100 boxes of confidential letters and memorandums between the bank and regulators in both countries to help it with its investigation.

Daiwa, which was fined $340 million and expelled from the United States for its role in covering up Mr. Iguchi's losses, unveiled them in September 1995. Soon afterward, he was arrested and he pleaded guilty to hiding losses by making illegal trades and forging documents.
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