Japanese Executive Is Victim of Rare Firing : Management: A debt-laden trading company ousts its president under pressure from its bank. The last such incident was in 1982.
Japan’s financial woes over high interest rates and falling real estate and stock prices continue to spread. And now, those woes have resulted in a rare firing of a top Japanese executive.
At the behest of Sumitomo Bank, the board of troubled Itoman Corp. on Friday voted to oust Yoshihiko Kawamura, who had served as president of the Osaka-based trading company since 1975.
The last time a board fired an executive in Japan came in 1982, when the president of Mitsukoshi, Japan’s oldest department store, was ousted.
Sumitomo Bank President Sotoo Tatsumi called Kawamura’s dismissal necessary to rehabilitate Itoman, a second-tier trading house with annual sales of $6.8 billion. Under the weight of some $10 billion in debts, Itoman’s credit rating has been successively downgraded.
Sumitomo, which sent a “rescue team” of its own staff to Itoman last fall, will support the rebuilding of the company, Tatsumi said. Sumitomo is the firm’s “lead bank.”
Kawamura is only the latest in a string of victims of the financial squeeze caused by higher interest rates and risky land deals.
Only last Oct. 7, Ichiro Isoda, Sumitomo’s own chairman, resigned to assume responsibility for the arrest of a branch manager on charges of illegally arranging loans to finance stock manipulation. Authorities at that time were also scrutinizing loans that Sumitomo Bank itself had given to a company operated by a stock manipulator, and to Itoman for land speculation.
Another victim has been Shuwa Corp., a major real estate owner with large holdings in Southern California. It turned in November to Daiei, a supermarket firm, for financial help. Another firm heavily indebted because of real estate investments is Kyowa, a steel frame builder. It filed an application with a court the same month to work out a debt-rescheduling plan.
Sumitomo’s representatives on Itoman’s board were reported to have persuaded other members of the board to go along with the move to oust Kawamura after the Itoman president rejected requests from Sumitomo to resign.
Immediately after Kawamura opened the regular meeting of the 29 directors, Vice President Shoichi Yoshimura tabled the motion to dismiss him. Another vice president took over and called for a standing vote. Yoshimura said the decision was unanimous, although several directors reportedly looked around the table before standing.
Yoshimura, who was elected to replace Kawamura, told reporters that the action was taken to rid the firm of “chaos” and lay the foundation for its recovery.
“I deeply apologize for disturbing the public,” he added.
Since Itoman’s troubles were highlighted by Isoda’s resignation last October, Sumitomo has been forced to raise its line of credit to Itoman to nearly $3.4 billion in mid-January from $2.3 billion.
Kawamura was dispatched by Sumitomo in 1975 to take over Itoman when the firm, which had traditionally focused on textile transactions, fell on hard times. He expanded the firm’s business into finance, real estate, food, industrial machinery and the leisure business, including development of golf courses.
But after the Bank of Japan started raising interest rates in May, 1989, Itoman ran into trouble meeting its payments when real estate prices started to sag.
Nationally, real estate loans by banking institutions totaled $412.3 billion at the end of September, according to the banking bureau of the Finance Ministry. But Yoshiyuki Okuma, a director of the Hokkaido Takushoku Bank, earlier this month predicted that a real estate crisis would not occur.
