Japan’s trade minister denied on Friday that his staff had directed an adviser to rely on Toshiba Corp’s foreign shareholders (6502.T) to ensure the management won a key vote on board membership last year.
The denials follow an explosive investigation commissioned by shareholders published on Thursday, which accused the government of colluding with Toshiba to put pressure on foreign investors to comply with management̵
Among the findings of the investigators’ report is that Toshiba, working in unison with the Department of Commerce, “effectively asked” a government adviser described as “Mr. M” to negotiate with the Harvard University Donation Fund to change its behavior in voting.
“Ministry officials have informed me that it is not true that a request for engagement with individual investors has been made,” Trade Minister Hiroshi Kajiyama said at a regular press briefing.
He added that the ministry is waiting for Toshiba’s response to the report.
Earlier, sources told Reuters that Hiromichi Mizuno, an adviser to the ministry at the time, told the Harvard Fund that it could be subject to regulatory scrutiny if the fund did not follow the recommendations of the management of the annual general meeting. The fund subsequently abstained.
Mizuno, a board member of Tesla Inc. (TSLA.O) and who previously headed Japan’s $ 1.4 trillion state investment pension fund, is currently the UN special envoy for innovation finance and sustainable investment.
He did not immediately respond to a request for comment.
THE “LAST GAS” OF THE MINISTRY?
The independent investigation found that Toshiba had developed a plan to unduly influence Singapore-based Effissimo Capital Management, Toshiba’s largest shareholder, to withdraw its proposed board candidates.
The report also says the plan aims to put pressure on another fund, 3D Investment Partners, in addition to the Harvard fund to change its votes, and that Prime Minister Yoshihide Suga verbally encouraged pressure on shareholders when he was chief secretary. during a meeting with a senior Toshiba CEO last year.
Suga, who left Japan yesterday for a meeting of G7 leaders in Britain, denied the allegation.
The report discredits the efforts of the Japan Financial Services Agency, as well as the Commerce Department itself, to improve corporate governance in Japan, and comes as the country seeks to strengthen its international reputation ahead of next month’s 2020 Olympic Games in Tokyo.
However, some investor activists said that the successful insistence of shareholders on an independent investigation in a landmark vote this year and the report’s findings show progress in Japan’s corporate governance.
“This is a direct result of Japan’s attempts to really have a world-class governance structure. That doesn’t mean they’re still perfect,” said Brian Haywood, chief executive of Taiyo Pacific Partners, an activist fund that has been working in Japan since 20 years .
“All of Japan Inc. is in no hurry to defend itself against Toshiba,” he said, adding that he saw the failure as a “last breath” of Japanese-controlled capitalism.
GLASS LEWIS STARTS “NO” VOTING
Speaking of headaches for Toshiba, which has yet to say when it will respond to the investigators’ report, the American proxy consulting firm Glass Lewis called on shareholders at this year’s General Assembly to vote against the reappointment of Toshiba Chairman Osamu Nagayama and four other nominees. the company.
He called the investigators’ report “a rather deadly accusation of the effectiveness of Toshiba’s main supervisory body and its ability to credibly represent the interests of all investors.”
As one of the industrial conglomerates that modernized Japan and helped its economic recovery after World War II, Toshiba enjoyed close ties with the government. Its nuclear reactors and defense equipment business mean that it is also closely monitored by industrial bureaucrats.
However, in 2017, littered with accounting scandals and massive write-offs of its nuclear reactor business in the United States, Toshiba had to quickly seek a large capital injection from foreign investors. As a result, activist investors represent 25% of Toshiba’s shareholding. He also had to sell his valuable chip.
Following current shareholder activists this year for greater accountability, Toshiba is facing a $ 20 billion offer from CVC Capital and has seen former CEO Nobuaki Kurumatani resign in the aftermath of the upheaval.
Although Toshiba rejected the offer, it said it would conduct a strategic review.
“Given the complete failure of Toshiba’s management and the lack of transparency shown by the independent report, we believe that radical reform through private ownership is the only viable way to rejuvenate the company,” said a CEO of a major Toshiba shareholder. not to be identified because of the sensitivity of the matter.
Shares of Toshiba closed 1.6 percent on Friday compared to the wider market.
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