Daiwa admits conniving with Iguchi

Daiwa Bank admitted yesterday it had connived with Toshihide Iguchi, now under arrest in New York, to continue selling US bonds after he had confessed to massive hidden losses. The revelation inflamed the row between the US regulatory authorities and the bank, whose US operations have been placed under a cease-and-desist order.

Mr Iguchi, Daiwa's former senior bond trader in New York, pleaded guilty on Thursday to a series of crimes, including what he termed a "conspiracy with managers" to conceal a $1.1bn (pounds 700m) loss on unauthorised dealing. Daiwa said it had ordered Mr Iguchi to continue selling bonds to earn profits with which to make up the interest payments due on bonds that were apparently still on Daiwa's books but which, in fact, had been sold off. US authorities are investigating why the bank waited six weeks after it was alerted to the problem to inform the banking supervisors.