Japanese Firm Accuses Pickens of ‘Greenmail’

A Japanese auto parts maker today rejected American investor T. Boone Pickens’ demand to review the company’s financial records.

In a hearing in Tokyo District Court, lawyers for Koito Manufacturing Co. argued that Pickens’ demand was part of a “greenmailing scheme,” rather than the exercise of a justifiable shareholder’s right.

Pickens is Koito’s largest single shareholder, owning 26% of the Tokyo-based firm’s shares.

It was the first hearing in a lawsuit the Texas oilman filed Jan. 13 following a long stalemate in his landmark battle for increased participation in the management of Koito.

Toyota Motor Corp., Koito’s largest customer, is the second-largest shareholder with 19%.

Pickens’ purchase of the shares has stirred speculation that he is trying to force Koito to buy his shares back at a profit, a practice known as greenmail. Pickens has denied the greenmail accusations.

Lawyers for Pickens maintained that his suit is based on a section of the Japanese commercial code that permits holders of more than 10% of a company’s stock to review its books.

The court set the next hearing for May 10.

Pickens filed the suit after he was denied a seat on Koito’s board of directors at the company’s annual shareholders’ meeting in July.

Toyota and other friendly companies together hold nearly 60% of Koito’s 160.4 million shares, each valued at $20.60 on the Tokyo Stock Exchange today.

In the United States, Pickens’ fight is considered by some people to be a test of the freedom of Americans to invest in Japan at a time when many Japanese companies are buying up U.S. companies and property.