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Wednesday, June 14, 2006

Fukui has 10 million yen in Murakami fund

Staff writer

Bank of Japan Gov. Toshihiko Fukui drew criticism Tuesday when he told a Diet committee he has 10 million yen invested in the Murakami fund, whose maverick founder was arrested last week for alleged insider trading.

News photo
Toshihiko Fukui

Prime Minister Junichiro Koizumi and government officials said Fukui's investment doesn't contravene BOJ rules because the central bank regulates bank officials' trading of stock, not investment funds.

But some people and opposition lawmakers said it was unethical of him not to have canceled the investment when he became governor of the central bank, because the BOJ rules also say bank officials should refrain from any action that invites suspicion of its fair operations.

Fukui revealed he invested privately in the fund in 1999 when he was head of private think tank Fujitsu Research Institute. He was appointed BOJ governor in 2003.

Yoshiaki Murakami, who was the investment fund's representative until his arrest, is suspected of insider trading in connection with purchases of Nippon Broadcasting System Inc. shares.

Asked if Fukui should have canceled the investment when he took office at the BOJ and should now be denounced for his actions, Prime Minister Junichiro Koizumi, who named Fukui to the BOJ, told reporters, "I don't think so."

Fukui's comments were in answer to a question from Tsutomu Okubo of the Democratic Party of Japan during a session of the House of Councilors Financial Affairs Committee. The revelation helped send the Nikkei average down to 14,218.60 from 14,833.01 Monday.

Fukui told the committee he was one of several people who invested when the fund was set up in 1999, after Murakami quit his senior position at the old Ministry of International Trade and Industry. Fukui got to know Murakami at Fujitsu Research seminars.

"The investment was aimed at helping Murakami realize his dreams," Fukui said. "But it's sad his final destination was far from his original goal."

The BOJ chief said he has never cashed in on his Murakami fund investment and has paid taxes on his gains.

He applied to cancel his investment several months ago but the process will not be complete until the end of this month. He said it was not clear whether the investment will result in any profit.

Information from Kyodo added

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