The Japanese government on Saturday, December 16, declared the two largest credit unions financing Korean businesses in Japan bankrupt due to their huge bad loans.
The Financial Reconstruction Commission (FRC) declared Kansai Kogin, the biggest, and the second-biggest Tokyo Shogin Credit Union insolvent and appointed administrators to examine their assets.
"Liabilities far exceed assets at Kansai Kogin," FRC chairman Hakuo Yanagisawa said in a statement.
Kansai Kogin's liabilities exceeded assets by 51 billion yen ($455 million) at the end of June.
Despite the FRC's repeated request to Kansai Kogin to come up with better financial solutions, the credit union "failed to submit realistic and substantial ways to improve its financial conditions," Yanagisawa said.
"Therefore, we decided to place the credit union under the management of our financial administrators," he said.
For Tokyo Shogin, the bankruptcy declaration came a day after the credit union asked the FRC to start bankruptcy procedures. Its liabilities exceeded assets by 21.8 billion yen at the end of March 1999.
Both Kansai Kogin and Tokyo Shogin would continue to operate under administrators and all their deposits would be fully protected, Yanagisawa said.
The Japanese central bank also gave its support and vowed to "provide necessary funds" for the credit unions.
In addition to the collapsed credit unions, the FRC decided to dispatch administrators to seven other credit unions which mainly do business with pro-Pyongyang Koreans in Japan.
The seven pro-North Korea credit unions were already declared bankrupt in May last year but their bankruptcy procedures have been stalled since then.
"It is necessary to appoint administrators to upgrade the transparency of their bankruptcy procedures," Yanagisawa said.
The failure of the two cooperatives set up by ethnic Koreans would be a major blow to Japan's Korean business community.
The largest number of ethnic Koreans lives around the western city of Osaka, Japan's second-biggest city where Kansai Kogin was based.
Kansai Kogin said Friday it would sue the government for what it called a one-sided bankruptcy declaration.
"If the Financial Reconstruction Commission takes action under the (corporate) rehabilitation law, we will begin procedures in court," the cooperative said in a statement.
"We cannot help but declare that the Japanese authorities have acted brutally and are attempting to force the collapse of the South Korean community in Japan," it said.— (AFP)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)
