Police Called In to Keep Order at Shareholder Meetings in Japan
The economic and corporate turmoil afflicting Japan in recent months helped to elevate a peculiar Japanese practice to new heights Thursday, when a record 2,235 companies held simultaneous shareholder meetings--nearly all under police protection.
About 10,000 police officers were mobilized to provide protection at about 2,100 of the meetings, which for years have been targeted by sokaiya--racketeers who buy small amounts of stock and then extort money from corporations by threatening to disturb their annual meetings.
Of all annual shareholder meetings scheduled by Japanese firms this year, 88% were held Thursday, with the number of meetings up by 125 from the previous record set last year, the National Police Agency said.
By holding so many meetings on the same day, companies can prevent sokaiya--and any other shareholders who might be unhappy with management--from attending more than a few meetings.
While the number of sokaiya has fallen sharply in recent years, this year saw an upsurge in complaints from legitimate shareholders angry about a string of scandals--from fraud to sexual harassment to AIDS-contaminated blood--that have hit Japanese corporations in recent months.
Among the highest-profile meetings was that of scandal-ridden Sumitomo Corp., which approved the creation of a special $1.4-billion reserve fund to cope with the recently revealed loss of an estimated $1.8 billion from unauthorized copper trades. To help finance that move, it approved the cancellation of an earlier $231-million stock-buyback plan, which had been intended to help boost the firm’s stock price. It also suspended the scheduled payment of $1.1 million in bonuses to board members.
About 370 shareholders attended the tense 40-minute meeting, held in the western city of Osaka, where Sumitomo is headquartered. The meeting itself was closed to news media, but reporters were allowed to view it on closed-circuit television. Approval of the plan to cover the copper trading losses provoked booing from some shareholders, but applause was louder.
“We apologize for the fact that the whole situation has damaged shareholders,” said Tomiichi Akiyama, whose post was shifted at the meeting from president to chairman, a move that was scheduled before the eruption of the copper-trading scandal. Some of the shareholders called on Akiyama to resign.
Coincidentally, the shareholders meeting took place as regulators from the United States and Britain began an investigation here into the copper-trading scandal.
Also drawing attention Thursday was the meeting of Mitsubishi Motors Corp., which was picketed by a group of about 25 Japanese and American demonstrators concerned about sexual harassment issues. Mitsubishi Motors Manufacturing of America, the firm’s U.S. subsidiary, faces a suit from the U.S. Equal Employment Opportunity Commission for allegedly permitting sexual harassment of female employees.
Japan’s banking crisis was also on display Thursday as government-backed plans for liquidation of seven bankrupt housing finance firms moved forward, with shareholder approval for the dissolution of Nippon Housing Loan Co. and Daiichi Housing Loan Co. A group of people calling themselves “shareholders ombudsmen” attended the Nippon Housing Loan meeting and criticized its managers for failing to fulfill their responsibilities.
A third firm, Japan Housing Loan Inc., obtained dissolution approval from shareholders on Wednesday, and similar liquidation plans are expected at the four other housing finance firms. The cleanup plan, which involves the use of about $6.8 billion in taxpayer funds, is seen as a key step toward resolving the overall bad-loan problems of Japan’s banking system.
In Hiroshima, where Mazda Motor Corp. is headquartered, some shareholders expressed concern over Ford Motor Co.’s growing influence in the firm. The U.S.-based auto maker expanded its stake in Mazda to 33.4% in April and won agreement for Henry Wallace, a longtime Ford employee, to become the firm’s president. Wallace was installed in that position Thursday.
“Is this company going to hand over its network of dealerships to Ford?” one shareholder asked.
At the shareholders meeting of Green Cross Corp., a major pharmaceutical firm, stockholders attacked management for a scandal involving the sale during the early- and mid-1980s of blood products contaminated with the HIV, the virus that causes AIDS. Green Cross and four other suppliers of such products recently reached an out-of-court settlement of a lawsuit filed by HIV-infected hemophiliacs.
Under that agreement, each victim is to receives a lump sum of about $413,000 plus monthly payments of about $1,375.
“If any of you can take pride in being a Green Cross executive, raise your hand,!” demanded one shareholder. None of the company directors responded to that remark.
* PROTEST: Demonstrators protest at Mitsubishi’s annual meeting. A1
* SUMMIT: G-7 set deadline for settling disputes. D2
