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For the past 17 weeks, the success of the Japanese program on Sunday night has dramatized the life of Eiichi Shibusawa, the face of the new Y10,000 banknote and “father of Japanese capitalism.” The show still has months to run, but we already know how it ends: Japan emerges from the 19th century with a unique, ethical, and socially superior brand of stakeholder capitalism, whose qualities resonate powerfully today.
It’s a welcoming mythology, which Toshiba, through its epic machinations with the government to suppress shareholder rights, may have finished pulverizing.
Perhaps the thorniest challenge of the 147 page report about Toshiba released last week by a group of independent researchers studying last year’s annual shareholders meeting, is figuring out who’s the worst. The election includes the leadership of Toshiba, the Ministry of Economy, Trade and Industry (METI), the former head superstar of Japanese pension fund Hiromichi Mizuno, $ 1.6 million, potentially prime minister Yoshihide Suga and, critically, the global image of Japan as an investment destination. Nobuaki Kurumatani, qui resigned as CEO of Toshiba in April, probably the border.
Beyond that, the really awkward question is whether the last six years of apparent slogans and reforms, during which Japan has tried to convince the world of its commitment to governance and custody, have been the farce that pessimists have always they feared that they were under the superficial signs. of progress.
The document rich in bad will eviscerate a collaboration between the government and Toshiba management in which both sides seem to see voice shareholders and activists as an enemy. He concludes that Toshiba’s 2020 general assembly was not executed fairly. The collusion focused on relying on large private shareholders to shift their opposition to an AGM vote on the brink, on which Kurumatani’s survival depended. An executive, he alleges, called on the trade ministry to “beat” the big activist shareholders on its behalf. Another highlighted the way foreign funds were “afraid” of the Japanese authorities and hinted that this could be armed against them.
The report suggests that some METI officials believed there was leverage on foreign activists through the Foreign Exchange and Foreign Trade Act, a law whose revision in 2019 FT warned could have this effect. A later one letter to the FT of the Deputy Minister of Finance for International Affairs assured readers that activists could collaborate with Japanese companies to increase corporate value.
The investigation, which only happened because shareholders forced it on the company, is doomed in a way that Japanese reports rarely are: dishonesty, subterfuge and hypocrisy emerge as the culprit where it is usually blamed for incompetence, group thinking and indisputable hierarchical structures. In an unprecedented move, four Toshiba board members issued a statement describing the report as “surprising, disappointing and, in some areas, deeply disturbing.”
As the four pointed out, the detailed exposition of the report’s violations makes a particularly painful contrast to Toshiba’s original internal investigation into the issue: a whitewash that has made it seem like a master class in separating shareholder interests. and contempt for corporate governance.
For all this, the report is a document whose explosion radius depends on the viewer. For those who see their specific conclusions of an extraordinary business situation and who already thought Toshiba was an irreparable horror story of governance, the air is dense with smoking guns. For those who have long suspected that METI is predisposed to interference and even conspiracy, it does little to dissipate that the ministry would act similarly with other Japanese companies if it felt the need. It’s not hard to imagine Carlos Ghosn, who long ago alleged that METI is among the conspirators rushing his 2018 arrest, using this report to bolster that conviction.
But again, the strong temptation is to see the whole thing as revealing a broader truth: that the fundamental attitudes of corporate Japan and government officials most directly committed to it have, in many cases, changed only minimally in the direction of greater attention to shareholders.
This conclusion, for all its negativity, can ultimately be a useful thing if, as one of Toshiba’s major shareholders said, the report and its inflammatory nature now become the catalyst for real change. The risk surrounding Toshiba’s long stretch of misery, which began with an accounting scandal in 2015 and brought the company to the brink of collapse a few years later, has always been that it would be treated as a more remarkable aspect than not as seated. the same spectrum of poor governance as much of corporate Japan.
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