Japanese police on Tuesday arrested the head of an asset management company at the center of a scandal that saw the loss of almost $1.4 billion in pension fund money.
Tokyo Metropolitan Police said it held Kazuhiko Asakawa, 60, president of AIJ Investment Advisers, and three of his associates on suspicion of swindling 7.0 billion yen from two retirement funds.
But the firm’s total losses are said to top 109.0 billion yen ($1.38 billion).
The three men and a woman “conspired to defraud cash in the name of pension fund management” and lied in June and July 2011 by saying the retirement assets had steadily risen in value when, in reality, they had tumbled, a police spokesman said.
Earlier Tuesday, authorities reportedly raided the company’s Tokyo headquarters while questioning Asakawa, who has publicly admitted that he inflated investment returns but denied that he tried to deceive clients.
“I didn’t want to use inflated figures for the pensions fund, but (I did because) I did not want to come back with losses, no matter what,” he told a parliamentary panel investigating the matter earlier this year.
“I was confident of recouping the losses.”
AIJ’s operations were suspended in February in a scandal that has rocked Japan where a rapidly ageing population is increasingly looking to private pension funds to help them through their retirement.
The revelations came after a massive loss cover-up scandal at camera and medical equipment maker Olympus last year, which badly damaged Japan’s corporate governance image.
The Securities and Exchange Surveillance Commission has said AIJ, which managed 145 billion yen in retirement funds, lost at least 109.0 billion yen in an alleged fraud that reportedly affects more than 880,000 policy holders.
In March, the watchdog raided AIJ’s headquarters after company officials said they could not account for much of the pension money that it managed.
Earlier reports have said AIJ boasted it was posting annual returns of up to 240 percent in a market where many investment funds were struggling to keep their heads above water.