Japan Acknowledges Kept Secret Deposit With The Fed
By Yuka Hayashi, Of THE WALL STREET JOURNAL
TOKYO -(Dow Jones)- The Japanese government's probe into a confidential post- war agreements with the U.S. not only confirmed the existence of a secret deposit that Japan kept with the Federal Reserve for nearly three decades, but also uncovered Tokyo's lax management of information related to its foreign reserves.
Japanese Finance Minister Naoto Kan said Friday the ministry's recent investigation into a 1969 bilateral accord confirmed that the financial settlement Japan made with the U.S. to end its occupation of Okinawa was larger and more complex than previously acknowledged and included a secret non-interest deposit the government and the Bank of Japan kept at the Federal Reserve Bank of New York.
The deposit totaled $103 million during much of its life before the two nations agreed to lower it to an unsubstantial sum of $3 million in 1999. The deposit was counted as part of Japan's official foreign reserves and consisted of dollars the Japanese government received from the Okinawans in exchange for yen in 1972 when the U.S. ended its post-war occupation of the southern Japanese island.
The non-interest deposit amounted to a de-facto financial payment, as the U.S. was free to manage the money to generate returns. U.S. embassy press officers couldn't be reached for comment.
The probe was part of broader efforts by the government of Prime Minister Yukio Hatoyama to improve transparency in foreign policy. Late last year, the government launched investigations into what it called "secret documents" that chronicled confidential national security agreements that Washington and Tokyo clinched during the decades following World War II. Earlier this week, Foreign Minister Katsuya Okada unveiled the outcome of his ministry's probe, confirming the existence of agreements related to the nature of U.S. forces stationed in Japan and the shipments and storage of nuclear weapons in Japan.
Many of these documents, including the one studied by the finance ministry, had long been declassified and made public in the U.S. but the Japan's previous government had never admitted the existence of such agreements.
The document studied by the finance ministry revealed in addition to the no- interest deposit, Japan paid a total of $405 million to the U.S. at the time of Okinawa's return to cover the cost of the infrastructure left by the U.S. forces and the consolidation of U.S. military facilities. The formal bilateral agreement at the time listed the amount as $320 million. The document, signed between Anthony J. Jurich, special assistant to the Secretary of the Treasury, and his Japanese counterpart Yusuke Kashiwagi, was kept at the National Archives in the U.S. but lost in Japan.
At a press conference announcing the outcome of its probe, Kan said the finding was disturbing on two levels: That the Japanese people were kept in the dark for so long about how a portion of their financial assets was managed; and that the ministry itself had no record of the deposit and the bureaucrats who had the knowledge of it didn't seem to have passed it on to their successors.
"We need to admit humbly to ourselves that a piece of historic information related to our own asset management was kept on the U.S. side" but not in Japan, Kan said. He added that in the future, the ministry will step up efforts to ensure the transfer of historic records related to important international negotiations to the national archive.
A finance ministry officials said the loss suffered by the Japanese people as a result of the agreement to keep its portion of the deposit interest free for 25 years was $46 million. The calculation is based on the assumption the money would have earned that much in income if it had been invested in U.S. Treasurys yielding an average of 6%. The total loss would have been nearly double that amount as the calculation doesn't include the portion deposited by the Bank of Japan.
A Japanese official said the decision to lower the deposit to $3 million was prompted by an inquiry made by the Bank of Japan in 1999 as part of its preparation for a revision in the law governing the central bank's function. Until then, the Japanese side had apparently made no action to release the money from the deposit even after the 25-year-period set by the original agreement expired, Kan said.
A Bank of Japan official declined to say why it still keeps $3 million in the no-interest deposit account.
-By Yuka Hayashi, The Wall Street Journal
(Megumi Fujikawa contributed to this report.)
(END) Dow Jones Newswires
03-12-100734ET
Oh yes, there is that transparency that I always hear about regarding central banks/the fed.
Everything is above board, never, ever do they do anything in secret....LMAO
By Yuka Hayashi, Of THE WALL STREET JOURNAL
TOKYO -(Dow Jones)- The Japanese government's probe into a confidential post- war agreements with the U.S. not only confirmed the existence of a secret deposit that Japan kept with the Federal Reserve for nearly three decades, but also uncovered Tokyo's lax management of information related to its foreign reserves.
Japanese Finance Minister Naoto Kan said Friday the ministry's recent investigation into a 1969 bilateral accord confirmed that the financial settlement Japan made with the U.S. to end its occupation of Okinawa was larger and more complex than previously acknowledged and included a secret non-interest deposit the government and the Bank of Japan kept at the Federal Reserve Bank of New York.
The deposit totaled $103 million during much of its life before the two nations agreed to lower it to an unsubstantial sum of $3 million in 1999. The deposit was counted as part of Japan's official foreign reserves and consisted of dollars the Japanese government received from the Okinawans in exchange for yen in 1972 when the U.S. ended its post-war occupation of the southern Japanese island.
The non-interest deposit amounted to a de-facto financial payment, as the U.S. was free to manage the money to generate returns. U.S. embassy press officers couldn't be reached for comment.
The probe was part of broader efforts by the government of Prime Minister Yukio Hatoyama to improve transparency in foreign policy. Late last year, the government launched investigations into what it called "secret documents" that chronicled confidential national security agreements that Washington and Tokyo clinched during the decades following World War II. Earlier this week, Foreign Minister Katsuya Okada unveiled the outcome of his ministry's probe, confirming the existence of agreements related to the nature of U.S. forces stationed in Japan and the shipments and storage of nuclear weapons in Japan.
Many of these documents, including the one studied by the finance ministry, had long been declassified and made public in the U.S. but the Japan's previous government had never admitted the existence of such agreements.
The document studied by the finance ministry revealed in addition to the no- interest deposit, Japan paid a total of $405 million to the U.S. at the time of Okinawa's return to cover the cost of the infrastructure left by the U.S. forces and the consolidation of U.S. military facilities. The formal bilateral agreement at the time listed the amount as $320 million. The document, signed between Anthony J. Jurich, special assistant to the Secretary of the Treasury, and his Japanese counterpart Yusuke Kashiwagi, was kept at the National Archives in the U.S. but lost in Japan.
At a press conference announcing the outcome of its probe, Kan said the finding was disturbing on two levels: That the Japanese people were kept in the dark for so long about how a portion of their financial assets was managed; and that the ministry itself had no record of the deposit and the bureaucrats who had the knowledge of it didn't seem to have passed it on to their successors.
"We need to admit humbly to ourselves that a piece of historic information related to our own asset management was kept on the U.S. side" but not in Japan, Kan said. He added that in the future, the ministry will step up efforts to ensure the transfer of historic records related to important international negotiations to the national archive.
A finance ministry officials said the loss suffered by the Japanese people as a result of the agreement to keep its portion of the deposit interest free for 25 years was $46 million. The calculation is based on the assumption the money would have earned that much in income if it had been invested in U.S. Treasurys yielding an average of 6%. The total loss would have been nearly double that amount as the calculation doesn't include the portion deposited by the Bank of Japan.
A Japanese official said the decision to lower the deposit to $3 million was prompted by an inquiry made by the Bank of Japan in 1999 as part of its preparation for a revision in the law governing the central bank's function. Until then, the Japanese side had apparently made no action to release the money from the deposit even after the 25-year-period set by the original agreement expired, Kan said.
A Bank of Japan official declined to say why it still keeps $3 million in the no-interest deposit account.
-By Yuka Hayashi, The Wall Street Journal
(Megumi Fujikawa contributed to this report.)
(END) Dow Jones Newswires
03-12-100734ET
Oh yes, there is that transparency that I always hear about regarding central banks/the fed.
Everything is above board, never, ever do they do anything in secret....LMAO