TOKYO — Japan’s Financial Services Agency has ordered JDC Trust, a fund that backs pics, toons, games and other content, to suspend business from June 19 to Sept. 18 pending a probe into allegedly illegal business practices.
The agency will also supervise a drastic restructuring at the company, which will include releasing JDC clients from their contracts.
JDC has been charged with making three illegal transfers of $3 million in trust accounts to pay off its own debts, from December 2007 to June 2008.
Last June the agency ordered JDC to shape up after it was discovered that employees had embezzled trust fund money. Last month, after JDC’s net assets fell below the legal minimum of 100 million yen ($1.02 million) to $480,00 the agency again ordered the company to improve its business practices, get its finances in order and return to the black.
On June 1, however, former prexy Mitsuru Hirata was fired for buying a car with $81,600 in company funds without board approval and for serving on other companies’ boards — violating Japan’s trust biz law.
Current JDC prexy, Kei Okuda, will have some explaining to do at the annual shareholders meeting on June 29, when a new management team is expected to be named.
JDC set up the trust in May 2005. It has given coin to Japanese distribs, including Movie-Eye Entertainment, Klockworx and Xanadeux, helping them to acquire and release foreign pics in Japan.
Another fund raised money for producer and distrib Cine Qua Non to make “Hula Girls,” a smash hit in 2006. Other hits, however, have been scarce.