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| According to media reports, Japan’s Financial Services Agency has ordered AIJ Investment Advisors Co., which manages corporate pension funds, to halt operations after investigators found the company lost about $2.3 billion. Authorities have to track down the money lost by AIJ as the total amount seems to reach new heights to become a major case in Japan. (EPA Photo) |
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Tokyo. A
growing scandal around an investment company that has lost $2.3 billion has
affected pensions for up to 880,000 people, Japan’s government said Tuesday.
AIJ
Investment Advisors has reportedly been lying to clients for years, boasting of
annual returns of up to 240 percent while in fact 185 billion yen in pension
investments has melted away.
The
company’s operations were suspended last week and the government ordered a
probe of 260 asset management firms nationwide after allegations that most of the
money in its care had disappeared.
The scandal
has shocked Japan, where a rapidly ageing middle class population is
increasingly looking to private pension funds, while the state retirement pot
also struggles due to gross mismanagement of its own.
The
government said Tuesday that the 185 billion yen was from 84 separate pension
funds, and affected 540,000 employees who were saving for retirement, as well
as more than 340,000 people already drawing their pensions.
Most of the
84 funds entrusted fractions of their savings to AIJ, but 13 funds had a
quarter of their investments exposed to AIJ, the health ministry said.
The
company, which was set up in 1989, has consistently reported healthy returns on
investments since the start of the last decade, but financial regulators now
say the bulk of the money it looked after is gone.
It was not
known whether the money was lost due to market turbulence or because the firm
diverted it for other purposes.
The head of
the Financial Services Agency (FSA), Shozaburo Jimi, said he had ordered
investigations into the assets of 260 investment management firms.
“We will
put all of our efforts in to clarify the facts of the AIJ case. We will get to
the truth and draft ways to prevent similar incidents in the future,” he told a
press conference.
Exact
details of how much has been lost were not available as the FSA said it was
unable to comment on an ongoing investigation.
The case,
however, has further highlighted the gap between what the greying nation needs
and its creaking public pension system, run by a government already saddled
with debt worth double the nation’s GDP.
The state
borrows money to finance roughly a half of its annual budget, amid dwindling
tax income due to two decades of economic stagnation and a shrinking workforce
caused by population decline.
Agence France-Presse
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