Some Japanese newspapers reported over the weekend that a government panel of experts will recommend the mandatory appointment of outside directors to the country's biggest companies. The intention would be to avoid a repeat of the scandal involving Olympus, the camera and medical equipment maker, whose bosses are under investigation for possible fraudulent dealings and crimes involving billions of dollars.
The suggestion of independent directors is worth half a cheer. It is a long way even from being discussed as a real proposal. To be effective, it would need to be part of a package of measures that would clean up doubtful accounting practices and try to prevent cosy ties between business executives, politicians and even gangsters.
As Olympus shows, Japanese businesses are not keen to reform and less so to be reformed. The mainstream domestic media is supine towards big business and was loath to investigate possible misdeeds at Olympus even when some of them were clear to see. The Japanese financial authorities so far have shown a toothless frown. The politicians haven't got a clue, except that business is good for donations.
More than four months have passed since the brave magazine Facta pulled back the curtain to expose questionable deals at Olympus, and two months have elapsed since the then-new chief executive, Michael Woodford, blew the whistle and asked the board questions concerning US$3 billion in deals that did not make commercial sense. For this, he was fired.
A combination of pressure from Woodford, with support from Nippon Life, the company's biggest shareholder, and other foreign funds that own Olympus stock, aided and abetted by persistent questioning from the foreign press, has kept Olympus in the murky limelight and turned the issue from a saga of poor management to a scandal involving fraud or worse.
Reuters on Sunday tracked down Akio Nakagawa, one of the key shadowy figures in the Olympus hinterland, at a Hong Kong apartment block. Nakagawa's US investment company earned the world's biggest fee, US$687 million, for advice on a takeover deal. The sum was equivalent to about 35 per cent of the US$2 billion deal in which Olympus bought Gyrus, a British maker of medical devices. Normally 1 or 2 per cent is paid for such advice. Olympus claimed to have no knowledge of Nakagawa's whereabouts. The Japanese media - and the Japanese authorities - were not on the scene before, or after, Reuters.
Had he been a sumo wrestler playing truant and soccer in Mongolia while claiming to be injured, hordes of Japanese television and print reporters would have been swarming all over the country to investigate the heinous crime, in hunting packs that would make British red-top tabloid reporters look like a tea-party of elderly aunts. The press and sumo guardians hounded bad- boy sumo wrestler Asashoryu Akinori from the sport because he did not 'respect' Japanese traditions.
