Toshiba Colludes with Japanese Government to Restrict Foreign Investors

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] It has been revealed that Toshiba colluded with senior Japanese government officials to exert influence over board appointments.

According to the Wall Street Journal (WSJ) and others on the 10th (local time), Nobuaki Kurumatani, who was Toshiba's CEO on July 31, 2020, limited the authority of foreign shareholders through close cooperation with officials from the Ministry of Economy, Trade and Industry in order to push a preferred candidate onto the board.

This fact was revealed through a 147-page report released the previous day by three Japanese law firms. Until now, Toshiba's management had desperately tried to prevent the disclosure of this report, but it was revealed following a shareholder vote in March.

According to the report, foreign shareholders including Epheso Capital Management expressed dissatisfaction with CEO Kurumatani's leadership and demanded an increase in shareholder returns through share purchases or dividends. In response, CEO Kurumatani collaborated with government officials to pressure the rejection of board appointment proposals by foreign shareholders such as Epheso Capital. Kurumatani resigned last April after receiving a buyout offer from the private equity firm CVC Capital Partners, but the acquisition was canceled.

The report pointed out, "The investigation found multiple suspected illegal acts and attempts to unjustly restrict shareholder rights," adding, "This was a plan to unfairly influence shareholders and prevent them from effectively exercising their voting rights."

In recent years, the influence of American hedge funds and activist investors within Japanese companies has been increasing. However, the Japanese government views this as a sensitive issue and has blocked the entry of foreign capital.

In particular, Toshiba has faced various issues such as accounting fraud, the sale of its semiconductor business, and capital erosion due to huge losses in its nuclear power business. Despite this, investors have suspected that Toshiba is being protected by the Japanese government due to the strong influence of its management.

A person identifying as a Toshiba shareholder stated, "This investigation has revealed the worst-case scenario that shareholders had long feared: a collusive relationship between a major corporation and the Japanese government."

Meanwhile, it is known that then Chief Cabinet Secretary and current Prime Minister Yoshihide Suga was involved behind this scandal. Prime Minister Suga denied the allegations, stating, "I have no knowledge whatsoever."

This content was produced with the assistance of AI translation services.