Prosecutors arrested Japanese railway and property magnate Yoshiaki Tsutsumi, once the richest man in the world, on Thursday on suspicion of making false financial statements and insider trading, media reported.
Tsutsumi, 70, former chairman of Seibu Railway group firm Kokudo Corp., is suspected of approving the falsification of financial statements by Seibu Railway and of approving the sale of its shares before the scandal was revealed.
The Tokyo District Public Prosecutors Office declined to comment.
Seibu Railway was delisted from the Tokyo Stock Exchange on Dec. 17 after the regional railway operator admitted it had given false information on shareholdings for many years.
Listed as the world’s richest man by Forbes magazine for four years from 1987, Tsutsumi is one of four brothers born to Yasujiro Tsutsumi, a farmer’s son who had built a massive real estate and railway empire.
Born to Yasujiro’s third wife, Yoshiaki was groomed by his father, known as a tyrannical businessman, to succeed him. This set the stage for a deep-seated rivalry with his artistic eldest brother, Seiji, who inherited only the Seibu Department Store group and a helicopter firm after their father’s 1964 death.
In his heyday, Yoshiaki was also known for his dictatorial style and his shunning of the consensus-building that has long been seen as a basic principle of Japanese management.
Well-connected to ruling party politicians, Tsutsumi expanded his father’s empire by developing ski resorts, golf courses and hotels. Several of his Prince Hotels were built on land formerly owned by Japan’s royalty, hence the name.
A keen sportsman, Tsutsumi bought a baseball team, the Seibu Lions, served as chairman of the Japan Ski Association and played a key role in bringing the 1998 Winter Olympics to the central Japanese city of Nagano.
In 1987, he controlled 70 companies employing 35,000 people and was estimated to have a fortune of $21 billion.
But his holdings took a big hit during Japan’s 1990s economic slump. Tsutsumi made Forbes’ billionaires list in 2004 with estimated worth of $3 billion, coming in at number 159.
The Tokyo stock market was unfazed by news of the arrest, which flashed across TV screens just before the end of morning trade. Yasuo Ueki, a market analyst at consultancy Poko Financial Office, said the ties between Seibu Railway and Kokudo were “extraordinary” and unlikely to be replicated by other firms.
“So we shouldn’t worry about Tsutsumi’s arrest and whether this will have any impact on the market,” Ueki said.
