Report: Bank settles case for $194M

Shinsei Bank Ltd., Japan’s first foreign-owned lender, has agreed to pay ¥21.8 billion (about $194 million) to settle a lawsuit involving a resort developer that owned the Hyatt Regency Saipan, according to international news reports.

Bloomberg, quoting lawyer Ed Calvo, reported yesterday that his client, EIE International Corp, agreed to the settlement over the weekend.

EIE International had been seeking compensation at the CNMI Superior Court for losses on its properties.

The administrator of EIE International was quoted in a Reuters report as saying in January that it was preparing to sue the defunct Long-Term Credit Bank of Japan, Shinsei’s predecessor, claiming LTCB had sold its overseas properties at unfairly low prices.

EIE, the bankruptcy trustee and the liquidator of a resort developer that failed in the 1990, was one of the biggest customers of Shinsei’s predecessor, LTCB, which collapsed in 1998.

Reports said that Shinsei faced claims in excess of $4.3 billion as cited in March by William M. Fitzgerald, one of the lawyers who brought the case.

This lawsuit came when in the 1980’s Japanese investors reportedly spent billions of dollars buying overseas assets “only to sell them at knock-down prices after the bubble economy burst.”

The EIE administrator had said the bank was selling EIE properties to recover loans, and that the affected properties were worth around ¥1.2 trillion yen. ($1=112.35 yen)

Shinsei was quoted, though, in the Bloomberg report as saying that the amicable settlement doesn’t mean that the bank admits to the accusations.

“We have sufficient counterarguments and protection against the claims, yet, we agreed to compromise as this was a burden on us that was likely to continue longer,” it added.

Bloomberg further said that Shinsei, which contested the claims earlier, will ask the government-run Deposit Insurance Corp. of Japan to contribute ¥17.4 billion to the settlement amount, in line with a 2000 agreement.

Bloomberg said that Deposit Insurance Corp., which mediated the settlement, confirmed the agreement but didn’t confirm the settlement amount.

Ripplewood Holdings LLC, which led a group of U.S. investment firms to acquire Long-Term Credit Bank of Japan in 2000, reportedly agreed with DIC at the time that liabilities resulting from any lawsuits that exceeded ¥5 billion would be guaranteed by the agency.

Shinsei has reportedly already set aside ¥5 billion against a possible loss from the lawsuit.

The suit claimed that former managers of Long-Term Credit Bank “actively conspired to defraud EIE” by taking control of the Hyatt Regency Saipan Hotel and estates in Australia, the Pacific Rim, Europe and the U.S. and selling them below market prices, the suit claimed.

Meantime, Calvo was quoted in the Bloomberg report that the “global settlement” will be closed on June 16 in Tokyo.

Such settlement would resolve the civil actions in Tokyo, California, and Saipan.

The Saipan Tribune tried to obtain comments from Calvo and Fitzgerald but both were unavailable.

The case filed on Saipan includes EIE International Corp. and Jordan Services Ltd. represented by the Calvo and Clark law office as plaintiff.

The case was against Shinsei Bank Ltd., aka The Long-Term Credit Bank of Japan Ltd.; Credit Suisse First Boston (Hong Kong) Ltd.; Saipan Portopia Corp Hotel Corp., aka Portopia Saipan Hotel Corp. doing business as Hyatt Regency Hotel Saipan, and Does 1-20.

Last April, Jordan Services Limited accused an officer of the firm that owns the Hyatt Regency Saipan of perjury in a lawsuit involving the Shinsei Bank.

In this lawsuit, Jordan and EIE International Corp. sued the bank and Saipan Portopia Hotel Corp., which acquired the Hyatt Regency Saipan sometime in 1991.

Jordan accused Portopia officer Tsutomu Nakauchi of lying to the court on different aspects in connection with the purchase of Hyatt. Jordan, represented by lawyer Pedro M. Atalig, requested the Superior Court to vacate an earlier order on the summary judgment request filed by Portopia, saying that such request was anchored on perjured testimony.