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The gigantic scope of Iguchi's fraud, and the bank's seemingly lackadaisical response even after it surfaced, raised questions on Wall Street about whether the 44-year-old trader--whose nicknames were "Tosh" and "Toshy"--had acted alone or with the help of friends in high places at the bank. It was noted that nearly two months passed between the time Iguchi blew the whistle on himself in a July 13 letter to bank president Akira Fujita and the time Daiwa informed authorities on Sept. 18--despite the fact that U.S. state and federal regulations require banks to give immediate notification of criminal behavior. And although Daiwa relieved Iguchi of his responsibilities in July, it did not get around to firing him until Sept. 26--two days after the FBI went to his home to arrest him.
While Daiwa said it needed time to ascertain facts before informing the authorities, some Wall Street experts said the delay looked suspicious and improper. "That is not acceptable behavior in our view," says Heinz Binggeli, managing director of Emcor Risk Management, a consulting firm. "You don't let two months pass before you shut down the operation." Says the chief government-bond trader for a large Wall Street firm: "This went on undetected for 11 years? Come on, who's kidding whom? It's a joke."
In Tokyo the scandal threatened to complicate efforts to ease the three-year banking crisis and rescue eight housing lenders that are wobbling beneath $84 billion of bad real estate loans. Just last week a government report urged the use of taxpayer funds to bail out the banking system. That outraged critics like Hatsuko Yoshioka, the head of Japan's powerful Housewives' Association, an umbrella organization of 391 women's civic groups. Yoshioka wants major banks like Daiwa to commit some of their vast resources to shoring up ailing banks and housing lenders. Says she: "Daiwa Bank, although it lost $1.1 billion, is still going to be in the black this year. Why is that? Even when banks have big problems, they can still have profits."
Iguchi, who could face up to 30 years in prison and a $1 million fine if convicted of bank fraud and forgery, remained a mystery to his neighbors and colleagues as he languished in a Manhattan jail cell. He is divorced but has custody of his two teenage sons. The threesome moved from one neighborhood to another in 1991, finally settling into a house currently worth about $300,000. "I've never seen him, and we live right across the street," says Karen Donow of Kinnelon. "I've seen the kids playing basketball, but that's it. No one knew him. He just came and went."
Iguchi, who is now an American citizen, shed his Japanese roots early on. A native of Kobe, he graduated from high school in 1969 and swiftly lit out for the territory, which in this case meant Southwest Missouri State University, in Springfield. Iguchi, one of 54 foreigners in a student body of more than 12,000, majored in psychology and became a cheerleader before graduating in 1975. "He was a little shy," recalls retired mathematics professor Howard Matthews, who advised foreign students at the school. Matthews remembers Iguchi as "an A and B student and a courteous young man" who was active in the campus international-students group.