SBI Holdings, Inc. (SBI) submits the following clarifications
regarding certain reports in the media issued today on various news
wires.
#1: INACCURATE MEDIA REPORTS CONCERNING SBI's CORPORATE TAX
PAYMENTS
On May 8th of this year, SBI announced through its corporate
website that after undergoing an examination by the tax authorities
during the March 2006 period, in line with directions from the
authorities, SBI, despite differences in opinion with the tax
authorities, filed an amended return and paid the taxes due. And since
this time no additional taxes have been levied at SBI by the tax
authorities. At no time has SBI ever been accused by the tax
authorities of "hiding income."
With regards to reports concerning stock transactions between an
SBI fund and an SBI subsidiary, in reality the party involved in the
stock transaction was not an SBI subsidiary, but an unrelated real
estate company. Further, the stock in question, originally held by a
fund managed by SBI, involved a small company which had, since the
fund's initial investment, grown significantly due in part to its
merger with another company. Therefore, as a matter of course, in the
time between the SBI fund's first and second investment, not only did
the value of the small company grow, but there was a change in this
company's stock price as well.
The SBI fund and the real estate company each obtained their own
objective stock price evaluations conducted by independent third party
appraisers, after which the parties then conducted the stock
transaction. Therefore, as the determination of the stock price was
fair and appropriate, SBI does not believe the transaction can be
construed to be a donation.
#2: INACCURATE REPORTS CONCERNING STOCK TRANSACTIONS
Further, in the reports issued today by certain news media
organizations alleging SBI's hiding of taxable income, those reports
that suggest SBI's stock transactions with a real estate subsidiary
were designed to create profit were totally wrong. The real estate
company involved was not an SBI subsidiary company, and SBI has also
never received any directives from the tax authorities concerning
these stock transactions. Therefore any suggestion that SBI engaged in
stock transactions "to support its subsidiary company" or to "make
donations to its subsidiary company" are inaccurate.
# 3. INCORRECT REPORT BY TOKYO SHIMBUN DATED OCTOBER 27, 2006
The Tokyo Shimbun newspaper implied that SBI Holdings, Inc
("SBI"), using a group investment fund, intended to provide funds to a
Liberal Democratic Party (LDP) politician by purchasing shares in a
politician's Internet business company. This allegation is completely
false.
The company referred to in the news release (the "Company") was
established in April 2000 with the goal of operating businesses that
utilize computer network and internet services. The Company, involved
in the so-called "Millennium Project" initiated by the Japan Chamber
of Commerce and Industry (JCCI), was to pursue its business goals
through the application of U.S. business methodologies with the aid
and support of the JCCI.
In September 2000, a fund managed by SBI acquired a percentage of
shares in the Company due to the Company's allocation of shares to the
third party. At the same time, the fund entered into an option
contract with the Company to purchase additional Company shares from
its president in December 2000. Consequently, contrary to what the
newspaper reported in its article, the fund's investment into the
Company has no connection whatsoever with the President's subsequent
candidacy for the Japan House of Councilors. Indeed, as of September
2000, neither the fund nor SBI was aware of the Company president's
intention to run for a seat in the House of Councilors the following
year.
SBI has never made donations to any political parties and/or
politicians. Considering the nature of SBI's businesses, SBI does not
see any necessity for political donations and has no plans to make
such donations now or in the future.
Some of today's news reports may detrimentally damage SBI's
reputation. SBI plans to immediately file formal protests with the
news organizations responsible for the news reports. SBI will also
begin reviewing its legal options and potential remedies.
