The chairman of Takefuji, Japan's largest consumer finance company, resigned on Monday amid allegations that he ordered employees to wiretap telephones of journalists who had written critical articles about the company.

Yasuo Takei's resignation following his arrest on December 2 marks a dramatic end to the career of a man who helped create the consumer lending business in Japan and is regarded as the industry's godfather.

Mr Takei's departure will stain his efforts to distance Takefuji and the consumer lending business from alleged connections with criminal behaviour, such as the use of gang members to collect overdue loans.

Mr Takei started his career in a family liquor store and later became a vegetable vendor on the streets of Omiya, a city in Saitama, north of Tokyo. Today, Takefuji has 1,892 branches and 3,375 employees and is listed in Tokyo and London.

Mr Takei has made extraordinary efforts to bring an air of respectability to the industry, including financing the Yasuo Takei lecture hall at the Gregorian University. For that he received the Ordine di San Silvestro, the Roman Catholic Church's highest order, from Pope John Paul II.

His fall from grace brings troubling questions to the international investors who own 26 per cent of Takefuji. Since its establishment in 1966 the company has been under Mr Takei's legendary single-handed control but now it must cope without a leader.

The company remains financially robust and should be able to weather the scandal, said Jason Rogers, credit strategist at Barclays. The company reported a net profit of Y95bn for fiscal 2002.

Mr Rogers said the company had Y58.5bn in cash at the end of September, against Y234.9bn in debt repayments due next year. Strong cash flow generated from loan repayments of Y313.2bn during the first half should ensure these obligations are met.

The average duration of its Y967.1bn debt is seven years, up from 5.8 years at end of March 2002. Only 15 per cent of the debt is borrowing from Japanese banks. "An extremely high capital ratio for a finance company of 45.8 per cent also provides solid protection for creditors," he said.

Takefuji's share price has dropped 16 per cent since Mr Takei's arrest but rebounded on Monday to close up 1.18 per cent at Y5,130 before the announcement.

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