TOKYO â€" An employee of Deutsche Bank’s Japanese brokerage unit was arrested on Thursday on suspicion of showering a local pension fund manger with expensive meals, golf outings and trips overseas in return for some 1 billion yen in investments.
Shigeru Echigo, 36, the former head of Deutsche Securities’ pension fund sales team, was arrested on bribery charges along with a former pension fund manager for a Japanese trading house, a Tokyo Metropolitan Police official said in a statement read out over the telephone.
Mr. Echigo spent at least 900,000 yen on food and drink, golf and overseas travel for Yutaka Tsurisawa, a pension fund executive for Mitsui, from April to August last year, according to the statement. The favors were meant to express thanks for some 1 billion yen in financial products Mr. Tsurisawa had purchased from Deutche Securities, and to encourage the executive to keep up those purchases, the statement said.
Deutsche Securities also spent over 5 million yen to entertain executives at two other corporate pension funds last year, Japan’s financial regulator said in a separate statement. Deutsche took executives at one of those funds out on some 40 occasions, on top of paying for overseas travel, according to the regulator, the Securities and Exchange Surveillance Commission.
The wining and dining of corporate pension fund executives had, in fact, become commonplace at Deutsche Securities, which set up shop in Tokyo in 2005, the Nikkei business daily said. In some cases, the feasting got
so out of hand that employees filed the mounting expenses over many days in a bid not to attract attention, the paper said.
The regulator advised that the government reprimand Tokyo-based Deutsche Securities over its conduct. Though entertaining clients is prevalent in the world of finance, giving out favors to clients in exchange for business violates government ordinances, it said.
In a statement, Deutsche Securities said that it was “cooperating fully with authorities†on the case. It said it took the arrest and the conduct leading up to it “very seriously.â€
The pension funds sales team was dissolved in September, said a spokesman for Deutsche in Tokyo, Aston Bridgman. Mr. Echigo has been suspended from the bank and is awaiting internal disciplinary action, together with other executives at the bank, Mr. Bridgman said.
Mitsui’s pension fund, which manages about 50 billion yen in employee pension contributions, also said it was cooperating with the authorities on the case and had started its own internal investigation. Mr. Tsurisawa retired from the fund in May, said a fund official who would not give his name.
The arrests offer a peak into the sometimes murky relationships between pension fund managers and the firms that advise and handle their investments. In a high-profile pension fraud scandal last year, executives at a Tokyo money adviser were arrested on suspicion of promising inflated returns to pension fund managers, but ultimately losing most of their 109 billion yen in investments. In that case, the adviser’s securities license was revoked.
Japanese financial regulators, who came under fire for their seemingly lax oversight of pension funds, have more recently stepped up their scrutiny of fund management.
The arrests come amid continued attention on misconduct at global financial institutions. On Wednesday, the European Union fined a group of the world’s largest banks a combined 1.7 billion euros to settle charges that they colluded to fix benchmark interest rates.The largest penalty was against Deutsche Bank, which agreed to pay about $980 million.
