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Elderly Japanese accuse banks of
deceit
By Suvendrini Kakuchi
TOKYO - Michiko Sugano, 63, is fighting a
desperate battle against a powerful enemy - Japan's
Asahi Bank, which has sued 17 senior citizens and wants
them to pay back the funds they had borrowed to put in
what later turned out to be dubious investments. "The
verdict is expected in January next year. My life
depends on the ruling," said Sugano.
In 1989,
Michiko Sugano and her husband, Kazumasa, borrowed what
today is the equivalent of US$1 million from Asahi Bank
to invest in a hotel project, whose stability the bank
had vouched for. But two years later, the construction
company involved in the project went bankrupt. The bank
is now demanding that the couple, financially dependent
on their pensions in their old age, repay the enormous
loan immediately.
The Suganos belong to the
Victims of Asahi Bank Association, a group set up four
years ago by defendants in the Asahi Bank lawsuit who
claim they were swindled by the bank. Some of the
group's members are more than 90 years old. In the
lawsuit, filed in December 1997, Asahi Bank is demanding
that its borrowers repay a total of $30 million.
"Their stories are pathetic," said well-known
human-rights lawyer and author Masae Shina, who is
appearing for them. "This case is a clear example of
deceit against civilians by the bank." Yet winning a
case against a giant Japanese company is almost
impossible, says Shina, who has defended victims of
medical malpractice. "There are no laws in Japan that
demand banks must produce evidence to prove their case
against their individual clients," she said. "There is
no responsibility on the part of the lender."
According to experts, these cases reflect the
human cost of the excesses that many banks committed
during Japan's economic bubble, a speculative boom in
the 1980s when they freely lent out money with just real
estate as collateral.
"The government recently
proposed new policies to help banks get rid of bad
loans. But the prime minister [Junichiro Koizumi]
ignores the plight of individual borrowers who are also
victims of the bubble era," said Shina.
Sugano
recalls how she and her husband was assured by the bank
on a number of occasions that their investment, covered
by a loan with a grace period of 10 years, was not a
risky one. "We were shown building plans of the hotel
and told explicitly by officials the bank had conducted
feasibility reports and everything was fine. We believed
what they said because it was a respected bank," she
said.
Most of the loans the borrowers took out
were "Free Loan" products, devised in the late 1980s to
promote lending that could be taken out using only
property as collateral. Japan's major banks issued more
than a million loans of this kind. Money was lent for
any purpose - variable insurance, stock investments,
golf-club memberships.
Koichi Ishiyama, a
business analyst, said that banks at the time hoped to
earn money through interest on these loans and thus
inflate their assets to improve their books. But in the
process, borrowers say, they were duped into taking out
loans by enticing terms such as long grace periods, high
returns and a way to avoid high inheritance taxes.
But the lenders paint a different picture. "The
bank never forced anybody to borrow a Free Loan. The
borrowers came equipped with all the necessary
documentation to borrow the loan so they obviously knew
what they were doing. We have no problem to listen to
their arguments," said an Asahi Bank official,
requesting anonymity.
"Much bad debt saddled by
banks today comprises these non-performing assets,"
explained Ishiyama.
Apart from Asahi Bank, other
top institutions such as Tokyo Mitsubishi Bank, Sanwa
Bank, and Fuji Bank have also been taking their
now-elderly borrowers to court over debts they have no
hope of repaying. As a result, many these of these
elderly Japanese have been experiencing serious
depression and one borrower committed suicide, according
to surveys conducted by Shina and other lawyers. The
properties of many borrowers have also been seized for
public auction, forcing them to live in small rentals or
with relatives.
Shina also said none of the
borrowers were given copies by the banks of the
documents they signed or name-stamped for the loan
transactions. "Thus there is no hard evidence that can
be presented by the victims to the court. These old
people never thought to tape their conversation with
bank officials. Japanese culture rarely questions
authority," claimed Shina.
Aiko Takasaki, 67,
said bank officials rushed her into signing a $16
million loan in 1990, which she took after mortgaging
her tiny home. "The official said conditions were such
that we can pay back at the time of my death. But four
years later, the bank demanded us to pay back
immediately - which is dishonest," she recalled.
Takasaki sued the bank for flouting the original
terms of her loan in 1995, and won an appeal from the
Tokyo High Court last April. However, she was told that
her home would still be auctioned.
Said
Takasaki: "There is no respect for the individual. The
high-handedness of the banks is intolerable."
(Inter Press Service)
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