[Major Listed Companies Including Nissan Suffer Massive Derivative Losses]
Nissan Motor Company recently disclosed losses amounting to hundreds of millions of dollars from derivative transactions, setting off a chain reaction as other export companies like Sony and Mitsubishi also revealed substantial foreign exchange losses, causing widespread repercussions.
The companies had signed currency option contracts as part of their hedging strategies against foreign exchange risks. However, the yen, which had surged earlier this year, plummeted in recent months, resulting in significant losses.
The currency option products in question are structured such that if the exchange rate falls below the lower bound of the expected range even once, the option contract becomes void. Conversely, if the rate surpasses the upper bound even once, the company must purchase more than four times the contracted amount in dollars and sell it at the pre-agreed exchange rate.
With the disclosed losses already exceeding $1.5 billion, numerous companies are believed to have yet to report their damages, suggesting that the total scale of the losses is likely to grow further.
Amid this situation, the Ministry of Finance has expressed grave concerns over the companies' financial damage...
"Minister, Vice Minister Okawara is here."
At the secretary's announcement, Sato Kazuya, a three-term member of the House of Representatives and Minister of Finance, put down the newspaper he was holding and spoke.
"Let him in."
A moment later, Vice Minister Okawara, dressed in a gray suit, entered the room and gave a polite bow.
"You called for me, sir."
"Have a seat."
Minister Sato, leaning back on the sofa, gestured with his chin toward the seat on his left.
At first glance, it was clear that the minister was in a foul mood. Cautiously approaching, Vice Minister Okawara took his seat.
A quick glance at the newspaper on the table was all it took for him to understand why the minister was displeased.
"What on earth have you been doing?"
The minister's irritated voice made Okawara lower his head like a guilty man.
"The media is making a fuss, yet why are you still dragging your feet instead of resolving this quickly?"
Minister Sato's sharp reprimand made Okawara's expression even more troubled.
"We have summoned representatives from Eldorado Fund, which sold the derivative products in question, and thoroughly reviewed the contracts to check for any unfair clauses... but—"
"But what?"
Pressed by the minister's glare, Okawara reluctantly continued.
"...We found no significant issues in the contracts."
"What?"
Sato raised an eyebrow and slammed his palm on the armrest of the sofa, shouting.
"What kind of nonsense is that? Companies are suffering massive losses, and you're telling me there was no deception at all?"
The minister's piercing gaze made Okawara discreetly wipe the sweat off his hands on his trousers before answering with difficulty.
"We examined the contracts multiple times, but there were no provisions that could be considered unfair. In fact, some clauses were even quite favorable to the companies involved."
"Is that so?"
The minister's tone was skeptical.
"Yes. For instance, the fluctuation range was set broadly between 78 yen and 100 yen per dollar, which experts agreed was highly advantageous to domestic companies."
"Then how did this mess happen?"
Given such terms, the situation seemed even more perplexing.
Okawara hastily explained, seeing the minister's deepening frown.
"No one anticipated such a sudden reversal in the yen's value after it surged past 80 yen in April, driven by hedge fund attacks."
Memories of the so-called Second Tokyo Air Raid, when George Soros's Quantum Fund and allied hedge funds launched relentless currency attacks, flashed through Sato's mind, making his face contort involuntarily.
"Damn it."
The minister groaned in frustration.
Watching him carefully, Okawara spoke cautiously.
"At this point, there is no solid legal basis to impose sanctions on Eldorado Fund."
Sato clicked his tongue and glared at him with disdain.
"So, are we supposed to tell the public that the companies got greedy, signed option contracts, and the cabinet mishandled exchange rate management?"
"That's... "
With cabinet approval ratings already at rock bottom, such an explanation was out of the question.
Frowning deeply, Minister Sato crossed one leg over the other and spoke.
"No matter what the contract says, the public doesn't care about that. They believed export companies were thriving thanks to the weak yen, only to hear that the profits they made are being siphoned off elsewhere. Of course, they'll be furious."
He tapped the armrest of the sofa irritably as he continued.
"And where do you think that anger will be directed? Naturally, they'll blame the cabinet and the Ministry of Finance!"
Vice Minister Okawara kept his head bowed, unable to lift his gaze.
Quelling his simmering frustration, Minister Sato straightened his posture and lowered his voice.
"If you dig deep enough, you're bound to find something. Even if you don't, it doesn't matter. Launch a thorough investigation into Eldorado Fund and show the public that we're doing our job."
A sinister glint flashed in Sato's eyes as he added,
"Of course, if any illegal practices are uncovered that could annul the option contracts or at least reduce the losses, that would be even better."
"...!"
Vice Minister Okawara looked up, startled.
"Eldorado Fund is American. If we're not careful, this could escalate into a serious diplomatic issue."
Unlike his subordinate, Minister Sato snorted dismissively.
"That doesn't matter. Investigating illegal activities is our legitimate right. If the U.S. raises objections, that would be overstepping and interfering in our internal affairs."
"That's true... but..."
Okawara trailed off, unable to hide his unease.
No matter how he thought about it, he couldn't shake the ominous feeling lingering in his mind.
"We've barely recovered from the humiliation at the hands of that bastard Soros, and now our companies are being toyed with by foreign hedge funds again. How do you think the public will view the cabinet and the Ministry of Finance if we let this slide? And how much more contempt will foreign hedge funds have for Japan?"
"..."
"We need to make sure they never dare to pull something like this in Japan again. Do you understand?"
Clenching his fist, Minister Sato fixed his subordinate with a steely gaze.
His unwavering determination left Okawara with no choice but to nod.
Though a sense of foreboding still gnawed at him, there was no room to argue when the minister had made up his mind.
"Yes, sir. I'll proceed as instructed."
A satisfied smile crossed Minister Sato's face as he relaxed.
"Just be careful not to handle the American staff too roughly. We can't afford unnecessary friction with the U.S. government."
After ordering an all-out probe, the minister now preached caution — an entirely contradictory directive.
'Unbelievable.'
But orders were orders. Stifling a deep sigh, Vice Minister Okawara bowed his head once more.
"Understood."
"Now go and carry out what I've told you."
"Yes, sir."
Vice Minister Okawara stood up, gave a polite bow, then straightened up and left the minister's office.
Once the door closed, Minister Sato loosened his tie knot with one hand and leaned back against the sofa, letting out a groan.
"There's already enough to worry about… If they're going to hedge foreign exchange risks, they should at least do it properly. What a nuisance."
* * *
The next day.
"Handle it this way."
"Yes, Director."
His secretary, Na Seong-mi, received the signed documents and stepped out.
With a significant portion of the piled-up work processed, Seok-won tilted his head left and right, lightly stretching his neck.
"I haven't been to the gym for a few days because of how busy I've been. No wonder my body feels stiff."
He was just considering squeezing in a gym session when his phone rang from his pants pocket.
[Boss. It's Landon.]
Hearing the voice, still hoarse as if Landon had just woken up, Seok-won instinctively glanced at his wristwatch.
"It's the middle of the night in New York. What's going on?"
[We just received an urgent message from the Japan branch. Officials from the Ministry of Finance's supervisory bureau raided the office, seized various documents and computers.]
Seok-won's slightly drowsy expression sharpened as soon as he heard the report.
"Is that true?"
[Yes. Not only that, but Porter, the branch manager, and all employees have been banned from leaving the country.]
"Damn."
Seok-won clicked his tongue briefly.
"I was hoping to settle this quietly… As expected, now that public opinion is heating up, the Japanese government seems determined to apply pressure."
[That's what I think too.]
"They didn't have any major altercations during the raid, did they?"
[Yes. They cooperated obediently without obstructing the search as you instructed. Of course, the important documents had already been moved to New York or shredded, so no matter how thoroughly they comb through the seized items, they won't find anything significant.]
Because they had prepared in advance, both of them were able to respond calmly without much panic to the sudden search and seizure.
[And through the large law firm we have on contract, we plan to lodge a formal complaint with the Ministry of Finance regarding this search and seizure.]
Seok-won replied with an indifferent expression.
"It's better than doing nothing, but you shouldn't expect too much."
Seok-won knew all too well about Japan's aggressive xenophobia, which applied discriminatory treatment and legal standards to foreigners, unlike their own companies or businesspeople.
Although the bubble had burst, the shadows of the glorious era when Japan stood as the world's number one economic powerhouse still lingered, so such practices weren't yet glaringly obvious.
However, as time went on and the swamp of recession and stagnation deepened, jealousy and envy toward foreigners or companies achieving success in Japan grew, and discrimination became more blatant.
'It will happen in the future, but the chairman of a French car company was arrested on charges of embezzlement and breach of trust, suffering for over a year before dramatically escaping hidden in a musical instrument case.'
Considering such incidents, it was hard to be confident that the Eldorado Fund branch employees in Japan would receive a fair investigation and treatment.
'No wonder the fugitive French car company chairman held a press conference to vent his pent-up grievances.'
The scene of him declaring that he was no longer a hostage of Japan's unjust judicial system, which disregarded basic human rights and was rampant with discrimination based on presumed guilt, left a deep impact on many people.
Moreover, since several of Japan's leading export companies, including Nissan, had suffered foreign exchange losses amounting to billions of dollars, and public opinion was unfavorable, the Japanese government and judicial authorities were highly likely to pressure the Eldorado Fund with an even more coercive and biased stance.
'We can't let that happen.'
Clearing his mind, Seok-won's eyes flashed sharply.
"Without hesitation, play the ace card."
[Understood. I'll contact Deputy Secretary Vincent at dawn.]
"Good. Notify me immediately if there are any changes."
[Yes.]
After ending the call, Seok-won set down his phone and leaned back.
"I can't wait to see their faces when they receive a call from Washington while trying to threaten us."
He muttered softly, curling one corner of his mouth.
It would be quite a spectacle, though he regretted not being able to witness it firsthand.
TL/n -
Carlos Ghosn, the former chairman of Nissan, who escaped from Japan in a musical instrument case (reportedly a large speaker case or a double bass case).
Carlos Ghosn was the chairman of Renault, a French car company, as well as Nissan and Mitsubishi Motors. He was under house arrest in Japan on financial misconduct charges but fled to Lebanon in December 2019 in a dramatic escape.
The escape involved a private security team smuggling him out of his home in Tokyo and onto a private jet, allegedly hiding him inside a large music equipment case.