A former inn site where the land fraud took place

The Weekly Economist has learned that an overseas investigation agency has made a move as related to the land fraud incident that involved a land property in Shinagawa-ku, Tokyo as well as Sekisui House which lost 5.55 billion yen in the incident.

 

According to a source, the FBI of the US had a phone interview on March 19, 2020 with Mr. Isami Wada, former Chairman of Sekisui House, and Mr. Makoto Saito, a lawyer and slate director proposed by a shareholder proposal to Sekisui House.  The FBI seems to be interested in where the lost funds went, and why Sekisui House has not made efforts to recover the funds.

 

Messrs. Wada and his team sent a letter in January this year to multiple investigation agencies as well as to MUFG (Mitsubishi UFJ) Bank that accommodated the settlement of the land transaction.  The letter requested an investigation into suspicious points in the fraud, and the FBI interview should have been conducted in response to the request.

 

The FBI is interested in the Mitsubishi UFJ Financial Group’s purchase of Sekisui House shares of earlier this month.  The Group purchased 7.48 million Sekisui House shares on March 9, 2020.  According to Bloomberg, the Group’s % ownership increased from 7.34% to 8.5%.

 

The purchase was in the middle of the stock market’s sharp fall due to COVID-19.  Sekisui House held a press conference in Tokyo on March 6, 2020 where they announced their opposition to the shareholder proposal that seeks to replace the current directors.  Sekisui House stock dropped by a total of 10% on two trading days of March 6 and March 9, 2020.  A U.S. financial expert says, “the purchase amid the market crash looks suspicious.”

 

The public relations department of MUFG Bank commented on the additional purchase of Sekisui house stocks that it is as part of the purchase of stocks by Mitsubishi UFJ Morgan Stanley Securities to sell to their customers.

 

Possibility of Money Laundering

 

The team making the shareholder proposal has pointed out that the fraud transaction shows multiple indicia of money laundering.  Mr. Wada and Mr. Saito have been arguing that in addition to Sekisui House, MUFG may need to be held responsible.

 

Why could MUFG not detect the possible money laundering?  The letter sent to them in January this year says “a suspicious transaction that possesses indicia of potential money laundering” involving “terrorist or organized crime organizations that may be linked to North Korea.”

 

　The Mitsubishi UFJ Financial Group responded in a letter dated March 24, 2020 that “there were no facts or incidents on the basis of which MUFG Bank could be deemed to ‘have failed in its responsibilities as a financial institution’ pursuant to, among other laws and regulations, the Act of Prevention of Transfer of Criminal Proceeds.”

　

Mr. Wada and his team are seeking to improve the corporate governance at Sekisui House and to replace the management team with its slate directors, and has initiated a proxy fight for the April 23 general meeting of shareholders.  The shareholder proposal has pointed out that the current management moved forward with the land transaction despite red flags and that they have not made sufficient disclosure of the transaction, thereby destructing corporate value as well as shareholder wealth.  They are proposing their own slate directors including Messrs. Wada and Saito.  Sekisui House opposed the argument saying that there were no improper transactions and that there is no candidate who possesses sufficient knowledge and experience in the housing and real estate businesses, and this has come to look like an all-out confrontation.