Press Conference by the Minister for Financial Services

(Excerpt)

September 13 , 2005

Q.

The election outcome is claimed to have been a historical victory by the ruling parties led by the Liberal Democratic Party. Judging from your personal experiences in the election race, what were the underlying factors that contributed to this? What kind of efforts should be enhanced in regards to postal services and financial administration based on the public opinion?

A.

The biggest factor that helped the ruling parties win such enormous support from the Japanese people was essentially Prime Minister Junichiro Koizumi's move to ask whether the Japanese people were for or against the privatization of postal services. The victory was largely due to the Japanese people's extremely strong support for his clear message.

I also stood as a candidate in the election, and gave more than 500 public speeches in my constituency since the dissolution of the Diet. Voters' interest was enormous: I deeply felt voters' interest in determining how postal privatization would relate to structural reform in the future and how it would affect people's lives through extensive questioning. This general election made me truly feel that the voters' support grew as I explained more. The Prime Minister got his point across to the Japanese people and won their support with his message, which regarded postal privatization as the key to structural reform and reflected his commitment to promoting the reform.

In regards to the efforts towards postal privatization based on such public opinion and expectation, I--as one of the Cabinet Ministers concerned--will firstly deal with the situation steadily by making utmost efforts to have the bill submitted as soon as the special session of the Diet is convened, as mentioned by the Chief Cabinet Secretary.

As for financial administration, one of the keys to promoting structural reform lies in financial reform. To carry out financial reform, we formulated and announced the Program for Further Financial Reform and the work schedule last December. We will steadily implement various measures based on this, and thereby facilitate structural reform. Recently, encouraging signs have started to appear: in particular, lending to debtors classified as ''normal'' turned positive for the first time in four years, and bank lending as a whole turned positive as well recently. Although it is difficult to say whether it will continue at this point, the fact that such encouraging signs are appearing indicates that the financial administration phase is changing dramatically. Under these circumstances, we must steadily work on reform to realize an ideal financial system as advocated in the Program for Further Financial Reform, and a dynamic financial system based on the private sector's strength, rather than by government initiative.

In terms of economic policy in general, we must steadily promote strategies that will bring about renewed growth for the Japanese economy in the future. Considered from such a perspective, it is extremely important to enhance our approach towards strategic regulatory reform and competition policies. Therefore, in view of future economic management, it will be extremely important to steadily carry out forward-looking structural reform aimed at creating new demand.

Q.

There has been daily media coverage regarding the responsibility of the auditing firm in the Kanebo accounting fraud incident, some of which point out the violation of the Certified Public Accountant Law. Acknowledging that it may be difficult for you to comment on an individual company, allow me to ask you in the general sense: if any accounting problems are found, what kind of administrative measures will be taken against the auditing firm to reveal the facts?

A.

I am aware that there are various news reports on the said case. However, as it relates to an individual case as just mentioned, I will refrain from commenting on it.

The Financial Services Agency (FSA) collects information broadly on a daily basis in regards to the situation surrounding audits by Certified Public Accountants (CPAs). If any infringement of legislations is found in the process, FSA will take proper action as necessary according to legislation.

Q.

This question relates to auditing firms and CPAs, rather than an individual case. As the Minister in charge, what do you think of such a situation in which a CPA played a part in the company's false statements as a sort of accomplice? Further, what should CPAs and auditing firms do to restore confidence?

A.

I will refrain from commenting on individual cases. In general, in regards to the false statements just mentioned, the members of top management who prepared fraudulent financial statements are required to assume criminal, civil and administrative liability. In addition, auditors who certified the fraudulent financial statements as being free of false statements, intentionally or negligently, are also required to assume criminal, civil and administrative liability. Therefore, we will take proper action according to legislation if there is any infringement in this regard.

Auditors--or CPAs and auditing firms--have a serious mission, so their involvement in making false statements will heavily affect and grossly undermine their trustworthiness. It goes without saying that interested parties should strive to prevent such incidents from happening. It is also extremely important to steadily develop a system to prevent such incidents from occurring. As the trustworthiness of auditors, CPAs and auditing firms is currently at stake, they are urged to make utmost efforts to perform their duties properly based on their respective missions.