August 5, 2021

“Often shaken by scandals which underline its still feudal functioning, Japanese capitalism has not completed its transformation”

Losses and profits. Excuse is the most popular sport in Japan. The vocabulary is immense and the gestures too. On the phone, in the street, in front of the cameras, we bow more or less depending on the situation. The leaders of the Toshiba conglomerate have experienced all facets for nearly six years. Since that day in 2015 when a huge accounting scandal wavered this 145-year-old lady, once a symbol of Japanese technological excellence. On June 18, 2021, it is President Osamu Yamaga who folded the bust. He recognizes a “Erosion of trust” to his group from the financial community. The word is weak and contrition was not enough. It was unloaded by the general meeting of shareholders this Friday, June 25.

Read also Toshiba’s long tumble

In March, a Singaporean activist shareholder, Effissimo officially requests an independent investigation into the company’s practices vis-à-vis its shareholders, in particular during the general meeting of June 2020. The management refuses on the pretext that an investigation internal has already washed the management of any suspicion of manipulation. But to general amazement, the troublemaker obtains the holding of an extraordinary general meeting of shareholders, who mostly vote in favor of the investigation.

Text messages and emails attest to collusion with the authorities and implicate the current Prime Minister in particular

And on June 10, the three mandated lawyers deliver their report. A bomb. He describes in detail how the management of the company got along with the powerful Ministry of Economy and Industry (METI) and with the government pension fund (the largest pension fund in the world), to illegally block any attempt to overthrow management by angry shareholders.

Ironically, they would have notably put pressure on the Harvard University fund, which professes the virtues of good governance to the whole world, to abstain from this vote. In addition, the five million votes of another recalcitrant shareholder were deliberately “forgotten”. Text messages and emails attest to collusion with the authorities and implicate in particular the current Prime Minister Yoshihide Suga, then secretary general of the government.

Dark corners

Considerable emotion that led to the resignation of five leaders, following that of the CEO in April. And today at the departure of the president. This case inspires three reflections that are valid beyond Japan. First, despite more than ten years of promises, the governance of Japanese companies is still marked by ancestral mistrust of shareholders, especially if they are foreigners. However, they had been called for help to save the company during a massive recapitalization in 2017. The government is indeed relying on the attraction of international investors to boost the country’s growth.

You have 22.37% of this article to read. The rest is for subscribers only.