Wednesday, November 14, 1990.
Osaka, Kitahama.
The fax machine in the Financing Department of Sumitomo Bank Osaka Main Branch started ringing at 9:06 AM.
A young clerk with three years of experience walked over first.
He thought it was just more correction materials from Sumitomo Chemical, as he was still holding the "Foreign Exchange Position Review Form" he had finished organizing last night.
He still clearly remembered the ashen face of Executive Director Yasui from yesterday; surely nothing worse could happen today.
But when he tore off the thermal paper and saw the header, his finger paused at the edge of the paper.
Sumitomo Metal Industries Secretariat
He subconsciously looked at the first line of the body text.
Notice Regarding Pre-audit of Documents Related to Export Business to POSCO, South Korea
The young clerk's back stiffened slightly.
The amount was clearly written.
7.4 million USD.
An export deal of steel products from Sumitomo Metal to POSCO in South Korea.
The notice was only one page, formatted neatly with restrained wording.
In view of recent risks regarding shipping schedules, letter of credit conditions, and foreign exchange settlement timing in overseas settlement operations, and to ensure the stability of transaction performance, the Head Office has entrusted Saionji Trading's Osaka office to conduct external document pre-audits and letter of credit condition reviews for relevant export documents.
This notice is merely a transactional CC for risk diversification arrangements and does not affect your bank's existing business relationship as the main correspondent bank.
The young clerk stared at the words "transactional CC," his whole body freezing.
The original documents had not been sent.
No commercial invoices, packing lists, draft letters of credit, or correspondence from the buyer's bank—nothing.
Sumitomo Bank Osaka Main Branch only received a copy of the notice.
In other words, Sumitomo Metal had not come to request a review from the Financing Department.
They were just notifying Sumitomo Bank.
The young clerk took the fax paper and walked quickly toward the executive director's office.
At 9:11 AM, Yasui received the first notice.
He did not speak immediately.
The office was left with only the soft sound of paper turning.
The young clerk stood in front of the desk, hands pressed against his trouser seams, even holding his breath.
Yasui finished reading the one-page fax and then read it again from the beginning.
On the second read, his gaze lingered for a long time on the three phrases: "external document pre-audit," "risk diversification arrangement," and "transactional CC."
These words were very clean.
So clean that no fault could be found.
Sumitomo Metal did not say Sumitomo Bank was derelict in its duties, did not say the Osaka Main Branch was intentionally delaying, and did not say they were going to sever the main bank relationship.
They even preserved Sumitomo Bank's dignity in the final sentence.
But dignity is sometimes more piercing than accusation.
Accusation means there is still room for argument.
Dignity means the other party no longer intends to argue with you.
He placed the fax paper flat on the desk.
"Has Umeba arrived yet?"
The young clerk replied immediately, "He has been notified; the Deputy Department Head is on his way from the Foreign Exchange Management Section."
Yasui did not speak again.
Unexpectedly, he felt nothing this time, not even the energy to be angry.
The other party's scale was too large; not only were they well-funded, but their background was also impeccable.
And his own side?
Not to mention the bad debts of Itoman, the Sumitomo Main Family was still stabbing them in the back.
This was a game destined to be lost.
At 10:32 AM, the second fax machine rang.
This time, several clerks in the Financing Department raised their heads almost simultaneously.
The female clerk in charge of receiving documents walked to the fax machine, tore off the paper, and her face changed after just one glance.
Sumitomo Electric Industries Secretariat
Notice Regarding Review of Soft Clauses in Letter of Credit for Singapore Cable Export Business
The amount was 4.1 million USD.
The wording in the body text remained restrained.
The Head Office has entrusted Saionji Trading to conduct external confirmation regarding the letter of credit soft clauses, the correspondence of insurance terms, and the path of the standby advising bank for this business.
The relevant arrangement is a risk diversification measure based on transaction security and shipping schedule stability; this is hereby copied to your bank.
Standby advising bank path.
Umeba stood in front of the fax machine, looking at these words, the muscles on his face twitching slightly.
Sumitomo Electric's phrasing was even harsher than Sumitomo Metal's.
They not only sent the documents to Saionji Trading for pre-audit but were also confirming the standby advising bank path.
This meant that if Sumitomo Bank continued to use "technical review" to stall the letter of credit notification or negotiation process, Sumitomo Electric could remove the business from Sumitomo Bank's channel at any time and turn to Citibank, DBS Singapore, HSBC, or even other foreign banks.
Yes, they had not openly broken ties.
They had just prepared an extra path for every single transaction.
Umeba suddenly remembered the word Yasui had used a few days ago.
Flood.
Water never comes in by knocking down a door.
It first seeps in through the cracks in the door.
Then the corners of the walls.
Then the floor.
By the time people finally look down and see the water surface, the whole house is already soaked.
At 1:07 PM, the third notice was delivered.
Sumitomo Light Metal Industries Secretariat
The amount was 1.9 million USD.
The business content was the procurement of aluminum processing equipment.
The Head Office has entrusted Saionji Trading to conduct pre-audits of import equipment payment terms, letter of credit opening paths, and shipping documents. The original relevant documents are temporarily kept by our Foreign Trade Management Department; if your bank requires transactional confirmation, please contact our Secretariat separately.
This time, no one in the Financing Department spoke.
Even the youngest clerk understood.
Sumitomo Light Metal closed the door even tighter.
They chose not to let the originals even enter the Financing Department.
"If confirmation is needed, contact the Secretariat."
This meant these businesses had been removed from the ordinary financing process and elevated to a level jointly monitored by the President's Office and the Sumitomo Main Family's Legal Department.
When Umeba walked into Yasui's office with the third fax, Yasui was looking at the two notices received in the morning.
On the desk, three sheets of thermal paper were laid out side by side.
Sumitomo Metal.
Sumitomo Electric.
Sumitomo Light Metal.
Added to the already successful Sumitomo Chemical, all four manufacturing companies had made their move.
Or rather, they had all betrayed them in a way of "non-cooperation."
Yasui looked up at Umeba.
"Where are the original documents?"
Umeba's voice was very low.
"They did not come in."
"What about the Foreign Trade Management Department?"
"Sumitomo Metal says the originals are not available for loan during the pre-audit. Sumitomo Electric indicates that the letter of credit draft is being externally verified. Sumitomo Light Metal told us to contact the Secretariat."
Yasui's fingers pressed slowly onto the desk.
"How much longer can Itoman hold on?"
Umeba did not answer.
Yasui stared at the three faxes and suddenly let out a long breath.
"Well, forget it. Leave it to fate."
Osaka City, Central District, Honmachi 4-chome.
The Fourth Floor of the Second Miharashi Building.
After 9:00 AM, the six fax machines in Room 401 almost never stopped.
The one closest to the window was responsible for receiving Sumitomo Metal materials, the one next to it received Sumitomo Electric, and the third one received Sumitomo Light Metal.
The remaining three were connected to the Tokyo Headquarters, Citibank Tokyo Branch, and foreign bank windows in Singapore, respectively.
Paper kept spitting out from the output slot.
The smell of thermal paper permeated the air, pressing a sense of busyness that made one's scalp tighten in the small office.
Nagata stood in the center of the office area.
He was not wearing a jacket today; his white shirt sleeves were rolled up to his forearms, and his tie clip had been taken off and placed on the corner of the desk.
In front of him was a whiteboard that had been temporarily moved in, with six lines written on it in black oil-based pen.
Letter of Credit Conditions
Insurance
Bill of Lading and Shipping Company Endorsement
Foreign Exchange Exposure
Real Trade Verification
Foreign Bank Liaison
Under each line, names and deadlines were hung.
"Sumitomo Metal, POSCO, 7.4 million USD." Nagata picked up the first stack of fax paper and handed it directly to a gray-haired man on his left. "Mr. Saeki, check the soft clauses first. Especially the buyer's inspection certificate, pre-shipment quality confirmation, and payment trigger conditions."
"Understood."
Saeki used to be the L/C supervisor for the steel department of Ataka & Co.
Three months ago, he was still queuing at the job placement agency in front of Osaka Station.
Today, he sat back at the desk, picked up a red pen, and took only four minutes to circle two problems on the first draft of the letter of credit.
"The buyer reserves the right to add quality objections within ten business days after shipment." Saeki did not look up. "This is unacceptable; it is equivalent to leaving a loophole for non-payment for the other party. Change it to be based on a third-party inspection certificate; objections will not affect sight payment."
Nagata nodded.
"Write it into the revision opinions."
He turned and handed the second stack of paper to another middle-aged woman.
"Ms. Horiguchi, please handle the documents for this batch of Singapore cables from Sumitomo Electric."
"Remember to focus on checking the insurance terms, and confirm whether there are any loopholes between the starting point of insurance liability and the port of loading."
Horiguchi pushed up her glasses.
She used to be responsible for Southeast Asian cable trade insurance at a bankrupt mid-sized trading company.
Later, the company went bankrupt after the total volume regulation, and her name disappeared from everyone's address book.
She flipped through three pages and stopped at the insurance document column.
"The starting point of insurance is written as 'ex-factory'." Her voice was fast. "But the port of loading on the bill of lading is Kobe. The intermediate land transport section is not clearly covered. If an accident occurs, the buyer's bank has reason to request supplementary explanations."
"Processing plan?"
"Ask the insurance company to issue an extension endorsement to cover from ex-factory to the port of loading. We can get the fax before 3:00 PM this afternoon."
Nagata wrote the time on the whiteboard.
Sumitomo Electric / Insurance Endorsement / 15:00
At the third desk, a short, stout man was on the phone.
His surname was Ohashi, and he used to handle shipping at Marubishi Bussan.
On the day the company went bankrupt, he personally turned off the last fax machine in the office.
Now, he held the phone between his shoulder and ear, flipping through the shipping agency directory while drawing lines on paper with a pencil.
"The Singapore agent can sign." He said to the receiver. "But the endorsement page must fully write out the relationship between the actual carrier and the issuing agent. Do not just stamp the agent's seal; the bank will pick at it."
He hung up the phone and turned to shout, "Mr. Nagata, if that batch of steel from Sumitomo Metal goes from Kobe, the shipping company agent can cooperate with changing the place of issuance, but we need to confirm the space before 5:00 PM today."
"Write it down."
On the other side, two younger clerks were breaking down the equipment procurement contract of Sumitomo Light Metal into payment nodes.
One of them came from a former mid-sized Kansai machinery trading company, specializing in importing Germany equipment.
He looked at the German quote and frowned.
"The advance payment ratio is too high. 30% advance, 60% upon seeing shipping documents, 10% after acceptance. This is unfavorable to the buyer."
"Advice?"
"The advance payment needs to be reduced to 15%, and the balance split into payment upon seeing the bill of lading and payment after installation and acceptance. At least add a performance bond."
Nagata listened and turned to write on the whiteboard.
Sumitomo Light Metal / Renegotiation of Payment Terms / Performance Bond
There was no extra sound in the office.
These people who had been thrown out of the system by the bank's total volume regulation and the wave of trading company bankruptcies simply sat back at their desks, using red pens, telephones, faxes, and the pits they had stepped into over decades to dismantle, correct, and reconnect transactions that were about to be dragged to death.
At 11:46 AM, the first comparison table was generated.
Sumitomo Chemical Malaysia Raw Material Procurement Case: Technical Review Comparison Table of Settlement Process
The table was divided into five columns.
Sumitomo Bank Rejection Reason
Saionji Trading Revision Opinion
Actual Issuing Bank Confirmation Time
Estimated Commercial Loss Caused by Delay
Whether There Is Technical Review Without Reasonable Basis
Nagata picked up the table and read through each column.
Sumitomo Bank rejection reason: Inconsistency between the place of issuance of the bill of lading and the contract jurisdiction clause.
Saionji Trading revision opinion: Change to be issued by the shipping company's Singapore agent and supplement the explanation of the agency relationship.
Actual confirmation time: November 7, DBS Singapore registration completed.
Delay loss estimate: Supplier suspended shipping notification once, potential space change fees and breach of contract risks calculated separately.
Last column: Further investigation is necessary.
Nagata put down the table.
"Three copies."
The clerk next to him stood up immediately.
"One for the Legal Department of Sumitomo Main Family, one for the corresponding corporate Secretariat, and one for the Tokyo Headquarters."
Nagata added, "For those involving potential damages, seal one copy for outside counsel. Do not mix it into ordinary business files."
"Yes."
At 2:25 PM, the first pre-audit opinion for Sumitomo Metal was completed.
At 3:08 PM, the Sumitomo Electric insurance endorsement fax arrived.
At 4:22 PM, the Germany equipment supplier for Sumitomo Light Metal replied that they could discuss a performance bond to replace part of the advance payment.
By 5:00 PM, Room 401 of the Second Miharashi Building had completed three preliminary comparison tables, eleven document revisions, four foreign bank path confirmations, and two sealed loss estimates pending review by lawyers.