Hirohito coins found to be counterfeited

TOKYO - Acutely embarrassed officials at the Bank of Japan and the Ministry of Finance acknowledged Wednesday that Japan's vaults hold at least $71-million in gold coins that no one - not even the central bank that minted the originals - had recognized as counterfeit until recently. It is the biggest counterfeiting scheme ever to hit Japan, and one of the largest in the world.

The coins were made four years ago to commemorate Emperor Hirohito's 60th anniversary on the Chrysanthemum Throne, which has only added to the officials' discomfit.

Whoever was behind the scheme was not only talented but rich. Each of the counterfeits contains 20 grams, or 64 hundredths of an ounce, of pure 24-karat gold, just like the originals, and each carries a face value of 100,000 yen, or about $690 at current exchange rates. The gold content value, at $420 an ounce, is less than half that.

The Japanese authorities say they have identified 103,000 counterfeit coins, including a cache found in the vault of the Bank of Japan, the central bank.

That means the counterfeiters stamped more than two tons of gold, and then made big profits by selling the coins at the large premium over the gold value Japan charges for the coin.

Police investigators believe the counterfeit coins were struck in Europe. A very small flaw distinguishes them from the original, but the police have not yet said publicly what the flaw is.

"Frankly speaking, this incident has been a rather big issue within the ministry," Noriyasu Kobayashi, a senior official in the Finance Ministry's Treasury Division, said Wednesday. He and his aides scurried to brief a very unhappy group of top ministry officials.

On television Wednesday night, another government official was more succinct. "This isn't supposed to happen in Japan," he said.

There is some evidence that the Japanese brought the fraud upon themselves when the Finance Ministry decided to make the coins risk-free for investors.

Unlike the Canadian Maple Leaf coin, whose price fluctuates with the market value of gold, the price of the emperor's coin was fixed at 100,000 yen. Investors can sell coins to the government for that price at any time, no matter what the price of gold.

If gold were to rise spectacularly, holders could sell their coins on the open market at whatever price they would fetch.

So far, no private individuals are known to be holding counterfeit coins, Finance Ministry officials said. If any are they are probably out of luck because the banks have said they will not honor counterfeit coins, even if they are made of gold.