Press Conference by Shozaburo Jimi, Minister for Financial Services

(Excerpt)

(Wednesday, March 21, 2012, from 8:10 a.m. to 8:18 a.m.)

[Questions & Answers]

Q.

Regarding AIJ Investment Advisors, the business suspension order will expire the day after tomorrow. Could you comment on media reports that a criminal investigation of the company will start and its license may be rescinded as early as the day after tomorrow?

A.

As you know, the Financial Services Agency (FSA) issued an order for the submission of reports on February 29 for a survey targeting all companies managing customers' assets based on discretionary investment contracts. All of them submitted reports by the submission deadline of March 14. As I told you at the previous press conference, the FSA is closely examining and summarizing the submitted reports while instructing the companies to submit supplementary reports or make corrections as necessary. We will narrow them down to a list of companies subject to a second-round survey as soon as possible and conduct that survey, which will be more in-depth. We will publish the key points of the results of the first-round survey as soon as possible.

As for what we will do upon the expiry of the business suspension order against AIJ Investment Advisors on March 23, it is true that the order will expire on Friday, March 23. The Securities Exchange and Surveillance Commission (SESC) is still conducting inspection and we need to wait until the facts are clarified. As I stated in the Diet the other day, the independence of the SESC is assured, so it would not be legislatively appropriate for me to give instructions. I recognize that this is related to the issue of how to keep the balance between the freedom of the liberal economy and the authority of the state. Ours is a liberal economy, not a command economy. So, the independence of the SESC is assured, as you know well. The basic idea is that, in a liberal economy, it would not be desirable for the state authorities to directly intervene in the economy, and I believe that the independence of the SESC has been maintained. As we need to wait until the facts are clarified, I cannot comment on future administrative actions at this time.

Q.

May I take it that the license may be rescinded the day after tomorrow?

A.

As I have been saying from the beginning, I will not rule out any option. However, as the SESC is independent, I cannot instruct it to do something at a certain time even though I am the minister in charge. This concerns the basic issue of how the state authorities should relate to a liberal economy, so it would not be appropriate for me to give instructions. Therefore, as you know well, I cannot comment on that.

However, as I have been saying from the beginning, I will not rule out any option. I believe that facts are being checked and Diet debate is being conducted, in an effort to identify the cause. We must appropriately deal with this case without ruling out any option with regard to the prevention of the recurrence. Ensuring the fairness and transparency of the market and the protection of investors is the FSA's most important mission, so we will dispassionately perform this mission while listening to the people's opinions.

Q.

In relation to dormant deposits, could you tell me about the status of deliberation on the plan to conduct a survey on all financial institutions?

A.

Regarding the utilization of so-called dormant accounts, deliberation is being conducted at the Growth Finance Promotion Council, which is headed by Minister Furukawa and which is under the Cabinet Secretariat's National Policy Unit, as I mentioned previously. As for matters deliberated by this council, basically, I would like you to direct questions to the Cabinet Secretariat's National Policy Unit. However, as Mr. Ogushi, the Parliamentary Secretary of the FSA, participates in this council, I understand that a survey will be conducted on the current status of dormant accounts in Japan and abroad as needed.

In any case, the FSA will cooperate with the council's deliberation from the practical perspective.

Q.

Am I correct in understanding that a survey on all financial institutions will be conducted?

A.

I have been informed that a definite decision has not yet been made. However, the Cabinet Secretariat's National Policy Unit will naturally make decisions on such matters if necessary, so the FSA is ready to cooperate.

Q.

The U.S. government has announced that it has excluded Japan from the list of countries subject to a law that imposes sanctions on foreign financial institutions that continue business with Iran's central bank.

A.

I understand that on March 20 (U.S. time), the United States decided to exempt Japan from the application of the National Defense Authorization Act. This is also a very important issue. Consequently, during the period of exemption, I understand that Japanese financial institutions will not be subject to sanctions under the National Defense Authorization Act. As you know, it is stipulated in the National Defense Authorization Act that the exemption may be renewed at an interval of 180 days.

Q.

How do you feel about this matter?

A.

Japan imports around 10% of its crude oil supply from Iran. As you know, the Strait of Hormuz is off the coast of Iran, and the “Strait of Hormuz dependency” is used as a yardstick for how much oil supply to Japan depends on this narrow passage. I was parliamentary secretary for international trade and industry when the first Gulf War broke out. Since then, Japan's heavy dependence on crude oil imports that come via the Strait of Hormuz has been its Achilles' heel regarding energy supply. Ensuring energy supply that does not go through the Strait of Hormuz, and diversifying the energy supply sources is a major national goal. However, Japan's Strait of Hormuz dependency has not declined much, and I recognize that this is a very important issue for the Japanese economy, so I will keep a close watch on the international situation.

(End)

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