June 17 (Bloomberg) -- Citigroup Inc. will receive 232 million yen ($2.4 million) from three former executives at a Japanese brokerage it bought in 2007, ending a two-year legal dispute stemming from an accounting scandal, court documents show.

Citigroup, which filed a lawsuit in April 2007 seeking 3.4 billion yen, settled with Junichi Arimura and two other former Nikko Cordial Corp. managers on June 10, said Nikko Citi Holdings Inc. spokesman Yoshito Shimoyama.

As part of the settlement, Arimura, who stepped down as Nikko Cordial’s chief executive officer in 2006, will pay 62.2 million yen, according to court documents seen by Bloomberg News at the Tokyo District Court. Ex-Chief Financial Officer Hajime Yamamoto agreed to pay 70 million yen. Hirofumi Hirano, the then-chairman of Nikko Principal Investments Japan Ltd., will pay 100 million yen, the documents show.

Shimoyama confirmed in a telephone interview that Citigroup had settled with the three former executives. He declined to provide details, citing a confidentiality agreement.

Arimura, 60, resigned after the company was accused of inflating profits. Citigroup, which agreed to buy Nikko Cordial in March 2007 after the scandal sent its stock plunging, last month struck a deal to sell some of the its Japanese businesses to Sumitomo Mitsui Financial Group Inc. for 545 billion yen.

Hirano left Nikko Cordial in 2006, and Yamamoto stepped down in 2007.

Audit Committee Ignored

Arimura joined Japanese investment company OGI Holdings Co. as chairman in 2008. He declined to comment, according to his secretary Miki Azuma. Messages left by telephone at Hirano’s offices at AlixPartners Asia LLC in Tokyo were not returned. Yamamoto didn’t respond to telephone messages left on the answering machine at his home in Saitama Prefecture near Tokyo.

An outside inquiry in January 2007 led by Masaharu Hino, a former commissioner of the Financial Supervisory Agency, said Yamamoto ignored an audit committee’s objections to the treatment of transactions boosting earnings by 13.7 billion yen.

The audit committee, led by Toshihiro Matsumoto, in November 2004 was told by an outside auditor that the company had added a gain from an exchangeable bond transaction to its profit, according to a 100-page report published by Hino.

The settlement isn’t related to Citigroup’s transaction with Sumitomo Mitsui, Shimoyama said.

To contact the reporter on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net

Last Updated: June 17, 2009 05:57 EDT