TATERU, the construction and property management company listed on the first board of the Tokyo Stock Exchange, is to be issued an order to cease operations by the Ministry of Land, Infrastructure, Transport and Tourism, in connection with TATERU’s falsifying deposit amounts for loan applicants.
By recording on-deposit balances much higher than they actually were, loan transactions were able to pass internal compliance much easier than they would have otherwise.
The MLIT considers this a company-wide problem at TATERU with country-wide ramifications, and accordingly the ministry has decided to act decisively in this instance.
The MLIT has decided to order TATERU to cease operations based on its supervisory powers under the Real Estate Transactions Law after carrying out inspections and having several meetings with company representatives. The duration and other details of the order have not been fully fleshed out yet.
According to the MLIT, there were 336 cases of falsified deposit amounts between 2015-18, with transactions in 10 different prefectures around Japan. The head of sales and senior assistant managers in charge of sales at TATERU were the ringleaders in the forgery, with 31 TATERU managers and employees found to be implicated in the fraud.
In September last year, TATERU had outside lawyers set up an internal investigation committee. The committee found 31 people involved in the deceit (roughly 6% of TATERU’s workforce), with approximately 350 suspicious cases identified. The committee concluded the fraud resulted from too much pushing to meet internal sales goals, and to prevent reoccurrence it established a new internal compliance function at the company as well as a phone line to outside attorneys for employees to report any illicit conduct.
All of this comes after the recent Suruga bank scandal involving investment properties and other recent scandals involving forgery to satisfy financing conditions for the Japan Housing Finance Agency’s Flat 35 mortgage loan.
Please see other stories on TATERU here: Tampering with customer loan documents rampant at Tokyo Real Estate Company TATERU (December 28. 2018)
- Ministry of Land to investigate possible fraudulent use of fixed-rate low-interest Flat 35 mortgage loans for investment
- The Japan real estate scandal grows: How many Mini-Surugas are out there?
- Suruga Bank to be ordered to suspend real estate lending operations
News source: Nikkei, June 17, 2019
Lead image: TATERU corporate logo