Press Conference by the Minister for Financial Services

(Excerpt)

September 16 , 2005

Q.

In the Kanebo accounting fraud scandal, four accountants at ChuoAoyama PricewaterhouseCoopers were arrested on Tuesday, on suspicion of being involved in the window-dressing of Kanebo's accounts. As the head of the supervisory agency, what is your opinion on this situation? In response to the series of incidents that have undermined confidence in audits recently, what needs to be done to restore confidence?

A.

My answer to this question is that it is truly regrettable Certified Public Accountants (CPAs), who should be playing a crucial role in ensuring confidence in corporate financial information, have been arrested. CPAs and auditing firms should fully recognize the importance of their respective missions and duties, and make the utmost efforts to conduct audits in a proper fashion so that confidence will not be undermined.

Q.

Is the government contemplating some kind of administrative action?

A.

As for the auditing firm, I would prefer to refrain from making any specific comments on individual cases, as I have stated in the press conference the other day. If I may answer the question in general terms, as I said previously, if there are facts which indicate that an independent auditor has intentionally attested financial statements with misstatements as being free from such misstatements, or negligently attested financial statements with gross misstatements as being free from such gross misstatements, a necessary probe may be conducted under the Certified Public Accountant Law. In any case, the Financial Services Agency (FSA) will keep a close eye on the developments in the investigation conducted by the Securities and Exchange Surveillance Commission (SESC) and the district prosecutors in the days ahead, and take proper action if necessary pursuant to laws and regulations.

Q.

Let me ask a question about Meiji Yasuda Life Insurance Company's unjust refusal to pay insurance money, which was reported in newspapers this morning. Reportedly, an inspection conducted by the FSA had pointed out that in its complaints procedures manual it instructed staff not to respond to a policyholder's first complaint. I am aware of your reluctance to comment on individual cases, so please describe, in general terms, what kind of stance would be appropriate in dealing with customers?

A.

I am aware of such news reports. However, I would like to refrain from commenting on it, as it relates to the inspection results of an individual insurance company.

Payment of insurance money is an extremely basic and crucial function for insurance companies. It is important for insurance companies to demonstrate such a function, so they should act in an appropriate manner.

Q.

Ashikaga Bank will reportedly file a compensation claim with the Utsunomiya District Court today against the independent auditor, ChuoAoyama PricewaterhouseCoopers, for actively being involved in the window-dressing of accounts in the fiscal year ended March 31, 2001. As the supervisory agency of banks and auditing firms, did the FSA take sufficient action in the past to deal with such a situation, considering that Ashikaga Bank was a recipient of public funds at the time? Also, is the FSA considering taking some kind of any action in the future?

A.

I am aware of the said news reports, but this is a matter that should be determined by Ashikaga Bank, so I would prefer not to make any comments at this stage. In any case, it is hoped that CPAs and auditing firms will fully recognize the importance of their respective missions and duties, and make the utmost efforts to conduct audits in a proper manner so that confidence will not be undermined.

Q.

Six ministers with an interest in postal services held a conference prior to the Cabinet meeting. Please describe, to whatever extent possible, what kind of discussions took place.

A.

I would like to refrain from commenting on the matter because it relates to the Diet proceedings in the days ahead. As a member of the government and as one of the ministers with an interest in the bill, I will first make the utmost effort to submit the bill quickly, with a sharp awareness of the public opinion reflected in the latest general election. Once the bill is submitted, I will strive to win understanding for the postal privatization bill at the Diet and have it enacted as soon as possible.

Q.

May we assume that the topic of the discussions today was the gist of the bill, or put differently, the extent of future amendments?

A.

I am terribly sorry for not being able to comment on this. In any case, the ministers concerned gathered and held discussions today for the purpose of submitting the bill promptly. We will strive to get as much work done as possible at the relevant Ministries and Agencies to have the bill submitted to the Diet promptly.