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JapanThursday, July 28

NHK Finds Japan Connection in Panama Papers

New information has surfaced linking a Japanese citizen to the so-called Panama Papers. NHK has learned that a former investment firm head who lost the pension funds of over 800,000 people in Japan was involved in irregularities using shell companies.

The Panama Papers contain millions of files on world leaders, other high-profile people and firms using tax havens. NHK obtained them through the International Consortium of Investigative Journalists, or ICIJ.

The data was originally leaked to German newspaper Sueddeutsche Zeitung. It contains more than 11.5 million files from Mossack Fonseca, a Panama-based law firm that is one of the world's largest specializing in offshore business.

NHK joined the unprecedented Panama Papers investigation in June. Since then, our reporters have investigated hundreds of those who have some connection with Japan. We identified 400 Japanese nationals from the data and uncovered one person who shocked the country 4 years ago.

Our findings reveal that Kazuhiko Asakawa and his associates established 2 paper companies in the British Virgin Islands around 1995.

Asakawa is the former president of Tokyo-based AIJ Investment Advisors.

The firm managed about 150 billion yen, or 1.4 billion dollars, for Japanese pension funds and other clients for almost a decade. Most of that money evaporated due to his poor management, and Asakawa was arrested in 2012.

He was found guilty of fraud, including falsifying reports to conceal the massive losses. He was sentenced to 15 years in prison.

NHK spoke to him three days before he was imprisoned, and told him his name appeared in the Panama Papers.

"Really? I didn't know that. You must be joking," Asakawa replied.

He later admitted to some illicit dealings through the offshore companies.

"We were able to buy firms in Hong Kong at the time. We bought them for our clients. One purpose was to help them avoid taxes. I felt that it was wrong, even at the time," he said. "Another aim was to manipulate share prices, though I can't say that openly. You don't want to directly issue an order on your own company's stocks in the Japanese market. You want to use foreign capital as a foreign investor, so it can go unnoticed in that way."

Asakawa claims the paper companies had nothing at all to do with his company's pension management business. He has denied any illegal use or concealment of the fund money.

Regardless of intent, Asakawa left hundreds of thousands of people without the pensions they'd been relying on. The receiver working on the case is still trying to determine if Asakawa has any hidden assets.

Asakawa was the first Japanese citizen to admit to illicit deals unearthed in the Panama Papers.

More than 100 media institutions around the world have joined the Panama Papers investigation. The 11.5 million documents reveal leaders, politicians and celebrities using offshore havens to avoid tax.

One Japanese expert says it's just the beginning.

"Since the Panama Papers emerged, the international community has recognized the need to have tougher regulation of tax havens and to promote information-sharing," says Yoshikazu Miki, a professor at Aoyama Gakuin University.

"The scandal has also revealed that tax havens have been used, not only for tax avoidance, but also for criminal purposes. In Japan, tax havens have been mainly seen as a way to reduce tax bills. But people here need to reconsider and reassess the problem," he says.

The Panama Papers reflects 40 years of work by the Central American law firm, helping the world's super-rich avoid tax. Our investigation with fellow journalists around the world will continue, on the documents that have sent shockwaves around the world.

NHK World's chief correspondent, Yoichiro Tateiwa, joins anchors Sho Beppu and Aki Shibuya in the studio.

Beppu: Asakawa has an obligation to repay missing money that he collected from pension funds if he still has assets. My question is, is he hiding money in Panama?

Tateiwa: That's what everyone wants to know. The lawyer working for people who lost their pensions told us that he is interested in our finding. The lawyer wants to look into the accounts of the companies set up by Asakawa.

Shibuya: The Panama Papers exposed the offshore finances of the rich and politically influential. The scandal forced Iceland's prime minister to resign. But not many Japanese have been connected to the issue. Why is that?

Tateiwa: The data include documents like emails between the Panama law firm and its clients, or papers about setting up new companies. It's not so easy to identify an individual just by looking at the name on the data. Some people have the same first and last names.

For example, former British Prime Minister David Cameron was easily identified because he is a well-known public figure. And he admitted. We can report on such people, especially if they hold public office.

But identifying a person is not enough to run the story. Setting up a company in a tax haven is not illegal unless it's a shell company intended to hide assets. In Asakawa's case, we identified him and he admitted illicit activities. And given the seriousness of the case 4 years ago, we decided to run the story.

Beppu: The Panama Papers have yet to snag a Japanese politician or influential figure. But it could happen in the future, maybe?

Tateiwa: That surely is everyone's interest. You're right, so far we have not found any political figure in the documents. It's not easy to investigate tax havens because even the documents in the Panama Papers do not give a full picture of offshore companies. We still have to dig the stories.

There are different views about the legality of tax havens. But many would agree that key information about a company -- regardless of where it is founded -- should be disclosed. If not, something needs to be done to change the situation.