Mr. Yoshiaki Tsutsumi, the former leader of the scandal-tainted Seibu Railway group, has been arrested on charges of presenting false financial reports and selling stock to clients without sufficient information disclosure. His arrest, carried out Thursday jointly by the Tokyo District Public Prosecutors Office and the Securities and Exchange Surveillance Commission, is a wake-up call to a business empire long ruled by an autocratic owner under a cloak of secrecy.

The former chairman of Kokudo Corp., the privately held firm that effectively controls the Seibu Railway group, is suspected of underreporting Kokudo's ownership stake in Seibu by using the names of employees to tag blocks of stock that were then sold to scores of the group's business partners who were not told the truth about the reason for the sale. Prosecutors should conduct a thorough investigation into the role played by the 70-year-old business tycoon.

The scandals have exposed the dark side of the Seibu Railway group, one of Japan's leading business conglomerates. In particular, they have focused a spotlight on its old-fashioned and clandestine corporate culture. Mr. Tsutsumi, who had ruled the group for 40 years, bears grave responsibility for all this. He has betrayed the trust and confidence of not only shareholders but also millions of ordinary people who use Seibu trains, hotels and department stores, and watch Seibu-sponsored professional baseball games.