The Tokyo High Court on Tuesday rejected an appeal by three former top executives of the now-defunct Long-Term Credit Bank of Japan who were convicted of window-dressing the bank's earnings reports.

Former LTCB President Katsunobu Onogi, 69, had received a suspended three-year prison term by the Tokyo District Court in September 2002, while former Vice Presidents Masami Suda, 65, and Yoshiharu Suzuki, 68, were handed suspended two-year terms.

The defendants were convicted of violating the Securities and Exchange Law and the Commercial Code by hiding some 310 billion yen in nonperforming loans.

The focus of the appeal was whether it was justifiable for the executives in fiscal 1997 to employ old accounting standards — in lieu of new, more transparent rules in place by then — in appraising the assets of the bank.

The defendants took issue with the district court's determination that the new asset assessment standards set by the Finance Ministry constituted "fair accounting practice."

They argued that the new standards only served as a guideline for financial institutions, and that there was nothing illegal in drawing up the bank's earnings reports using the old standards.

In rejecting their appeal, presiding Judge Atsushi Senba acknowledged that the new standards in themselves were not legally binding. But he added, "At that time, financial institutions were called upon to employ more transparent accounting procedures. Circumstances did not permit a self-evaluation sharply deviating from such standards."

According to the district court, the three executives authorized a financial report, for presentation to the government, undervaluing bad loans that totaled around 580 billion yen. The bank did not write off or build reserves for possible loan losses against around 310 billion yen in loans deemed irrecoverable, it said.