Japan studies cancellation of bond deal

December 24, 1990|By New York Times

TOKYO Japan's Finance Ministry has begun an investigation into whether Japanese brokerage houses intimidated two Japanese companies into canceling an agreement to issue new bonds through Salomon Brothers, an American brokerage with offices in Tokyo.

The ministry's confirmation that the investigation is taking place out of the public eye appears to be a tacit acknowledgement of a discriminatory practice that the ministry has long said does not exist.

The case has potentially broader implications, both for American efforts to obtain fairer competition in the Japanese financial markets and for the Finance Ministry's battle to keep other Japanese regulators out of its territory.

Two weeks ago, a report by the U.S. Treasury Department criticized the Japanese government for continuing to provide unfair advantages to Japanese banks and securities companies.

The report acknowledged progress toward the opening of Japan's financial markets but noted that many remaining barriers were informal, involving exclusionary practices rather than explicit rules.

One area singled out was the underwriting of securities for Japanese companies. It has been rare for a foreign securities firm to act as a lead underwriter.

Makoto Utsumi, the ministry's vice minister for international affairs, said the report was inaccurate. "We have nothing to be ashamed of," he said in defending the ministry's record of deregulation.

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