Shareholder revolt at Toshiba | heise online


The shareholders of the scandal-ridden Japanese industrial group Toshiba have surprisingly deposed the company’s chairman, Osamu Nagayama. Something like this is extremely unusual in Japan. Observers see this as a breakthrough in making Japan’s isolated companies more transparent and accountable.

Nagayama’s removal was preceded by an independent investigation. she has according to New York Times revealed that Toshiba executives worked with the Japanese government to put pressure on investors. Accordingly, the Toshiba group management was angry about the plan of the Singapore-based major shareholder Effissimo Capital Management to elect new supervisory boards.

Toshiba’s executives then turned to officials at the Japanese Ministry of Commerce to jointly persuade Effissimo Capital Management to withdraw. The 139-page investigation report from three independent investigators describes how Toshiba’s management allegedly worked hand in hand with government officials to influence the outcome of last year’s annual general meeting. A high-ranking Toshiba manager has even demanded that the company and government “beat up” the unruly shareholders. Today’s Prime Minister Yoshihide Suga is among the officials mentioned.

The tactic was initially successful. The then CEO Nobuaki Kurumatani was re-elected last year, but narrowly. But Effissimo was subsequently able to enforce the independent investigation. After the report was published, Toshiba boss Kurumatani had to throw in the towel, as did two other senior managers and two board members.

Nagayama, formerly CEO of Chugai Pharmaceuticals and board member of Sony’s board, was not involved in the scandal. He stayed in office for the time being. However, shareholders were not convinced that Toshiba is doing enough to address the grave allegations against the company. After a passionate annual general meeting and a lot of criticism, the 74-year-old Nagayama finally had to take his hat off. Satoshi Tsunakawa, who was only appointed CEO in April, has also been chairman of the board of directors, at least temporarily, since Friday evening.

Nagayama’s dismissal is highly unusual in Japan’s conservative corporate culture, in which corporations like Toshiba have for decades been run with little consideration for the interests of private shareholders. “Given the importance of Toshiba as a top company and the high positions of government officials and management involved, the vote is a message from domestic investors that misconduct and shareholder repression are a thing of the past and will no longer be tolerated,” said Justin Tang of investment advisor United First Partners in Singapore to Bloomberg. “This result is a sign of a paradigm shift in Japan and will only encourage activist investors, whether foreign or domestic.”

Once a name steeped in history in Japan, Toshiba has shrunk dramatically after years of management errors. The company had to pay a record fine after an accounting scandal. Then Toshiba had to send its nuclear subsidiary into bankruptcy, which cost billions. Toshiba invented the flash memory stick three decades ago, but in 2018 it was forced to sell most of its once lucrative chip business due to the loss of nuclear power. This deal brought fresh capital – but also new, more committed shareholders.


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