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3RD LD: Vice MOF chief Hirata to quit over shady stock trading.

TOKYO, March 26 Kyodo


Senior Vice Finance Minister Koichi Hirata said Thursday he will resign from the post the same day following the revelation of his shady stock sales earlier this month.

He earlier conveyed his intention to step down to Prime Minister Taro Aso. The premier told reporters he accepted the resignation offered by Hirata, an LDP House of Representatives member.

The move came shortly after his sale of a massive portion of stocks of a plasterboard maker via off-market trading drew fire. His conduct infringed on a ban on stock trading under the ethics code for politically appointed ministers.

The 60-year-old vice minister sold stock amounting to 8.68 percent of the total outstanding shares of Chiyoda Ute Co. based in Yokkaichi in central Japan's Mie Prefecture for 550 yen per share, a price nearly double its market value, to Zero System on March 2.

Zero System, a privately held firm also located in Yokkaichi, is a petroleum product sales company of which Hirata is the largest shareholder. Chiyoda Ute, founded by Hirata's father, is listed on the Jasdaq stock market for start-ups.

The ethics code requires politically appointed ministers and senior vice ministers to put stocks, if they hold any, in a trust and to refrain from stock transactions while in office. The code has no penalties.

Earlier in the day, Hirata denied the possibility of stepping down from his post at a meeting of the House of Councillors Committee on Financial Affairs, while expressing regret that the case has caused ripples.

He told the upper house panel he did not sell the stock in market trading because he thought it would ''trigger confusion.''

According to a report on major stock holdings submitted to the Finance Ministry's Tokai Local Finance Bureau, Hirata sold 1.12 million Chiyoda Ute shares at 550 yen each, for a total of 616 million yen.

Chiyoda Ute stock closed at 290 yen per share on the Jasdaq market on Feb. 27, immediately before his stock sale.

Hirosuke Noro, president of Zero System, said the firm had been asking Hirata to sell Chiyoda Ute shares for several years in a bid to bolster its ties with the plasterboard maker, to which his company provides fuel.

Noro said the sales price of the shares held by Hirata was set after consulting with a certified public accountant and that the firm has yet to pay for the stock.

Chief Cabinet Secretary Takeo Kawamura said Hirata reported his stock sale to the government.

Generally speaking, stock sales intended to generate funds for the payment of inheritance tax and cases in which sales contracts had been signed before ministers assumed office are considered to be immune to the ban under the ethics code, Kawamura said.

The senior vice minister was elected from the Tokai regional bloc under the proportional representation system.

He served as president of Chiyoda Ute between 1988 and 1995. The company, located in his constituency, is now headed by his brother.

Hirata was first elected to the House of Councillors in 1995 and won a lower house seat in 2003. He is currently serving his second term as a lower chamber member.

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Publication:Japan Weekly Monitor
Date:Mar 30, 2009
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