June 25, 2009Japan Post Holdings Co. President Yoshifumi Nishikawa submitted a business improvement report to the government Wednesday, listing punishments over the company's controversial attempt to sell its Kampo no Yado inns.
The report, submitted to Minister of Internal Affairs and Communications Tsutomu Sato, stated that Japan Post Holdings would aim to quickly implement reforms based on "strict reflection" and listed punishments including making management return remuneration.
After receiving the report, Sato told a news conference that he intended to allow Nishikawa to remain as president of the company. However he indicated that he was dissatisfied with the company's selection method for its newly established post of chairman and that he would boost surveillance of the company's management.
The report was a response to a business improvement order that former Internal Affairs and Communications Minister Yukio Hatoyama issued in April.
Regarding the sale of real estate, including the Kampo no Yado inns, the report said Japan Post lacked awareness of the fact that the real estate was jointly owned with the public, adding that measures to endure the sale was fair and transparent were not in place. It said that provisions such as weighing all the options at the decision-making time and record-keeping in the selection process were insufficient, and that not enough information was provided to the company's management.
Reform measures included the improvement of corporate governance, which had been pointed out in the business improvement order. The company will also establish a management advisory council comprising outside experts, local government officials, labor union members, service users, and members of Zentoku, the national association of postmasters. The company chairman to be selected from among directors outside the company within three months will take up the position of chair of the advisory council. Rules will be established with regard to reports made to the management council. A total of 10,000 workers will be enlisted as monitors at post offices across Japan, and rules will also be set in place over the sale of real estate. These reforms are to be implemented within one year.
Regarding the attempt to sell the Kampo no Yado inns for a total of 10.9 billion yen despite an overall set-up cost of 240 billion yen, including land purchases, the report said Japan Post Holdings would increase transparency, revealing the target sale price in the future.
To take responsibility for the mishandling of issues at the company, five people in management, including Nishikawa, will be forced to return up to 30 percent of their pay for three months, and four executives collectively referred to as "Team Nishikawa," who were on loan from Sumitomo Mitsui Banking Corp., will resign.
Speaking at a news conference, Sato said he had judged the report comprehensively. He added that he couldn't say there were absolutely no legal violations, although in relative terms it seemed that there hadn't been any.
However, regarding the position of chairman of the management advisory council, Sato said, "The current outside directors have been involved in the management up until now. The person in the position bears responsibility (in the problems pointed out by the Minister of Internal Affairs and Communications), and by having the chairman (of Japan Post Holdings) assume the position, the company will not be able to avoid criticism that it is only looking after its self interests."
Sato also requested that Japan Post Holdings employ personnel from outside the company rather than keeping seven outside directors including Ushio Inc. Chairman Jiro Ushio, who has supported the idea of Nishikawa remaining as president.
(Mainichi Japan) June 25, 2009
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