Prosecutors have begun to question former senior executives of the scandal-tainted Seibu Railway group on a voluntary basis over allegations of falsified financial reports about shareholders, sources said.

The Tokyo District Public Prosecutors Office suspects the group violated the Securities and Exchange Law by falsifying documents, committing insider trading and other infractions, sources said.

Prosecutors have been investigating those cases together with the government's Securities and Exchange Surveillance Commission.

Prosecutors have already questioned the group's top executives, including Seibu Railway's former president, Hiroyuki Toda, as well as a former executive managing director of Kokudo Corp., the top shareholder of Seibu Railway Co.

The focal point is now former Kokudo Chairman Yoshiaki Tsutsumi, who had long called the shots for the entire Seibu group.

Tsutumi stepped down in October to assume responsibility for Seibu Railway Co.'s falsifying of shareholders' status.

Investigators want to know exactly what role Tsutsumi and the others played in the false reports that prompted the Tokyo Stock Exchange to delist Seibu Railway Co. on Dec. 17.

The TSE prohibits the combined ownership of a company's top 10 shareholders from exceeding 80 percent for one year or longer.

However, Seibu Railway's top 10 shareholders, including Kokudo, had continued to own more than 80 percent of the railway company's shares for decades.

To cover up that fact, Seibu Railway had apparently been disguising some of the stock held by Kokudo as being owned by individual shareholders.

Seibu Railway finally went public with the excessive ownership last October.

It also came to light that Kokudo had been selling its Seibu Railway stocks since late August-well in advance of the October announcement-to about 70 companies that it did business with.

But no explanation over the excessive possession was given at the time.

Such practices would constitute false documentation, insider trading and even fraud, the sources said.(IHT/Asahi: January 12,2005)