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Orient Says Japanese Gangsters Got Loans by Hiding Criminal Ties

Orient Corp., the Japanese consumer credit firm being probed for lending to crime groups with Mizuho Financial Group Inc., said it’s cooperating with police to prosecute gangsters who obtained loans fraudulently.

The company is in talks with lawyers to consider action against borrowers who signed 37 loan contracts by falsely declaring they have no gang ties, Orient said in a statement on its website today. It is seeking to cancel the transactions.

Tokyo-based Orient submitted a report to the trade ministry today clarifying its role in lending to yakuza mobsters with Mizuho, its biggest shareholder. Japan’s financial regulator last month ordered Mizuho to improve compliance for failing to break off loans made to the gangs through Orient.

The consumer credit firm pledged to promptly recall or terminate loans to gangsters, most of which were made before October 2009, according to the statement. It identified 147 loans tied to the organizations, of which 37 were made based on false declarations.

In March 2011, Orient started requiring borrowers to sign documents certifying they have no affiliation with criminal gangs in order to qualify for loans, said Daisuke Muraoka, a company spokesman.

The Financial Services Agency ordered Mizuho, Japan’s third-biggest bank by market value, to improve compliance on Sept. 27 after finding that it failed to take sufficient steps to break off 230 transactions valued at about 200 million yen ($2 million) made through Orient.

The investigation escalated after Mizuho President Yasuhiro Sato said on Oct. 8 that a former lending unit head knew of the loans, correcting earlier statements by the bank that only lower-ranking officials were aware. The next day, the regulator told Mizuho to explain the discrepancy by Oct. 28.

Japan has stepped up efforts to combat yakuza gangs, whose activities range from extortion to drug trafficking, according to the National Police Agency. Ordinances came into effect nationwide in 2011 banning companies from doing business with the yakuza that would result in profit for the organizations.

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