The Tokyo District Court on Tuesday gave a four-year prison term to the former head of the failed credit union Cosmo Credit Corp. for extending illegal loans between 1992 and 1993.
In addition to jailing Sanpachi Taido, 56, the court also gave suspended jail terms of up to three years to four others, including former Cosmo Credit executives, for breach of trust.
Presiding Judge Kiyoshi Kimura said Taido and the four others provided 15.37 billion yen in loans to eight Cosmo affiliates without securing collateral.
Taido and the four others "made light of the duty of a public financial institution and repeatedly extended unlawful loans in a bid to prevent bankruptcies of affiliated firms" hit by the collapse of the asset-inflated bubble economy in the early 1990s.
Kimura also said Taido became obsessed with business expansion to meet his goal of converting the credit union into a bank and that this obsession contributed to the deterioration of Cosmo's financial condition.
The judge said Taido bears the brunt of criminal responsibility because he "played the leading role" in extending illegal loans.
Prosecutors had demanded a six-year jail term for Taido and up to three years in prison for the four others.
According to the ruling, the five inflicted financial damage to the credit union by offering the loans to the affiliates even though they were aware that the loans would likely be irrecoverable.
Cosmo Credit went bankrupt in July 1995 with 350 billion yen in bad loans and its operations were taken over by Tokyo Kyodou Bank in March 1996.
Taido, a former chairman of SS Pharmaceutical Co., served one term as a member of the House of Representatives from June 1980.