Top Azabu executives
arrested in Japan

The troubled real estate firm
owns several major hotels in Hawaii

From staff and wire reports

TOKYO -- The president and two other executives of Azabu Building Co. were arrested today on suspicion of illegally concealing the firm's assets to prevent creditors claiming them.

Arrested were Kitaro Watanabe, 63, the president, and Katsumi Naganuma, 62, and Shoichi Owaki, 60, board members of Azabu Building, one of the heaviest borrowers from failed housing loan companies.

In Hawaii, Watanabe was the early leader in Japanese "bubble" investing.

In a buying spree that started in 1986, Azabu companies spent some $600 million on Hawaii hotels. They later shed two of them but they still own the Hyatt Regency Waikiki, the Ala Moana Hotel, the Maui Marriott and the Keauhou Beach Hotel.

Azabu USAInc., the company's subsidiary in Hawaii, said today the events in Tokyo have had no effect on its Hawaii operations.

The three Azabu executives are suspected of having transferred some 1.3 billion yen ($11.3 million) in rents paid to the Azabu group to bank accounts of affiliated dummy companies, the Tokyo District Public Prosecutors Office said.

Prosecutors said the transfer of rents earned by Azabu between September 1994 and December 1995 was intended to keep such assets away from creditors. If convicted the three could be jailed for up to two years.

At present, the group has some 600 billion yen ($5.2 billion) in outstanding debts, including more than 110 billion yen to four housing loan companies taken over by Housing Loan Administration Corp., a government-backed debt-recovering body, investigative sources told Kyodo News Service. The group also owes some 160 billion yen ($1.4 billion) to Mitsui Trust and Banking Co., they added. Most of the loans have become nonperforming, the sources said.

Azabu Building drew international attention with a string of high-profile speculative stock investments and purchases of prime real estate overseas.

Azabu was pushed into a corner when the "bubble economy" burst in the early 1990s.

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