The last of the big spender: Ryoei Saito last week: under arrest and in deep trouble, a far cry from his coup at Christie's

Christie's New York auction, Tuesday, 15 May 1990. For sale: Van Gogh's Portrait of Dr Gachet, perhaps the most important painting to come to auction in the past decade.

Bidding began at dollars 20m and progressed by dollars 1m at a time. As the price became stratospheric, bidders dropped out until, when the figure reached dollars 30m, only two remained. One was a dealer for Christie's Zurich branch. The other, sitting expressionless in the middle of the audience, was Hideto Kobayashi, an art dealer with a gallery in the Ginza in Tokyo who was obviously bidding for someone else.

Clearly there was no sticking point for him: he was going to have the picture regardless of the cost. When the hammer fell, the price had reached dollars 82.5m, the largest sum paid - then or now - for a painting.

Early next morning Tokyo time, Ryoei Saito, the head of Japan's second largest paper manufacturing company, proudly announced that the Van Gogh was his. It had, he said, cost almost double what he had expected, but added: 'It's my principle to get what I want, no matter how much money it costs.'

Two days later in Sotheby's New York branch he paid another dollars 78.1m, this time for Renoir's Au Moulin de la Galette. Neither painting had been expected to make more than dollars 40-50m. In the West, the prices were dismissed as ludicrous, unfounded, distorting the market. But for Mr Saito, that was the point.

Later he casually remarked that he wanted the Renoir and Van Gogh paintings to be put in his coffin and cremated with him when he died. He retracted the comment when it caused an international uproar, saying it was only a joke for the tax authorities, but few people thought it was funny. He had already locked the two paintings away from the public in a warehouse, although he made a vague commitment to put them on show 'in about 10 years' time'.

The Japanese establishment, highly sensitive about what the world thought of Japan, was appalled. On the other hand, these were crazy days. The speculative boom had gone on for five years; acquisitiveness and prices were out of control. Other Japanese corporations in the Eighties had been paying way over the odds for the Rockefeller Center in New York, Columbia Pictures in Hollywood and Pebble Beach golf club in California, simply to prove they could do it. For some it was a way of saying Japan had 'arrived' internationally and was a force to be reckoned with after its humiliation in the Second World War.

But Mr Saito had his own personal wounds to salve: he was satisfying a debt of honour. Ryoei Saito was born in Shizuoka prefecture, south of Tokyo, on 17 April 1916. After studying commerce and law at university, he was drafted into the army and spent the war in China, returning to a ruined, penniless Japan. His father had set up the Daishowa paper factory in 1938, and his son took over the business from him, becoming president in 1961. 'We have to be greedy to make profits,' he told his employees bluntly in his inauguration speech.

The Sixties were boom years for the Japanese economy, and Mr Saito expanded the company rapidly, bringing in wood chips from the US when the supply from Japan could not meet demand. He also set up Daishowa subsidiaries in Canada, the US and Australia. At the same time he was establishing his own family dynasty in Shizuoka prefecture, with a headquarters located in the foothills of Mt Fuji. His brother became the prefectural governor, his son a member of parliament, and other relatives served on the company board.

But from the beginning Mr Saito showed himself to be dictatorial, erratic in his decision-making and almost casual in his financial affairs. He began collecting art for his personal collection with Daishowa company money in the Sixties.

In 1982, the Sumitomo bank accused him of mismanaging his debt-laden paper company, and demanded he sell off the art collection to ease the company's debts.

But Mr Saito was not to be defeated. Personal connections, his standing in the local community in Shizuoka and a single-minded determination contributed to his return to effective power. In 1986, he was able to get Daishowa to dismiss Sumitomo Bank. At the same time his brother, who had become president under the bank's supervision, was fired. The 'Emperor of Daishowa' was back.

But after Mr Saito's return the company again sank into debt: it now owes 464bn yen (pounds 2.9bn) because of over-ambitious expansion plans. The irony of Mr Saito's expensive art purchases at a time when his company was falling deeper into debt was not lost on his employees.

Last week the 77-year-old tycoon got his comeuppance. He was pictured crouching in the back of a police car, trying to hide his once-proud face from television cameras. He had been arrested for allegedly bribing a politician over a property deal that he had been planning at the same time that he bought the two paintings.

Mr Saito's company had large land holdings in central Japan, mostly devoted to timber to supply his paper mills. In an effort to bring in some quick cash, he decided in 1990 to build a golf course and a housing estate on company land in Miyagi prefecture. The land was officially designated as forestry, but according to public prosecutors, Mr Saito paid a bribe of 100m yen (pounds 625,000) to the prefectural governor to get 'special' planning permission. The permission was given and the value of the land rose to 44 times its worth as simple forest. Prosecutors are holding Mr Saito and the Miyagi governor, Shuntaro Homma, for questioning.

Many in Japan thought he was getting his just deserts: his brash, overly flamboyant behaviour had come to symbolise the worst excesses of the bubble years.

And when the owner of an eel restaurant brought a court case against Mr Saito, accusing him of using his fortune to seduce his wife, the news only confirmed his image as a roughneck provincial businessman who thought he could use his money to buy anything he wanted.

After he bought the Van Gogh and Renoir, Mr Saito's tax bill became the highest in Japan. In 1991, he paid 3.1bn yen (pounds 19m) in income tax. Far from complaining, he bragged about his taxes, and said he was worried that he could not keep up his record. 'I don't want to become number 30 or lower on the list (of taxpayers). I want to be at least number 10 or 15. So I have already started thinking about how to generate enough money to stay at that level.'

The Van Gogh and Renoir are still in storage, their values well below what Mr Saito paid for them. But the golf course has already been built. With characteristic taste, Mr Saito called it the 'Vincent Golf Club Sendai'.

(Photographs omitted)