The depth of collusion between Toshiba, the Japanese government and the former head of investment of the world’s largest pension fund to influence board nominations last year was revealed by an independent poll.
A Report of 147 pages published Thursday details the collaboration between the society and the government and states that Japanese Prime Minister Yoshihide Suga, who was the minister’s chief secretary at the time, had received updates on activists ’campaigns before the annual meeting. of July 2020, which concluded that it was “not sufficiently managed”.
Based on text messages, e-mails and other correspondence, the report describes how senior figures from the Ministry of Economy, Trade and Industry have collaborated with former Toshiba executives to prevent executives. to be voted out of their positions. Investigators conclude that the plot included “acts suspected of being against the law” and represented an attempt to unfairly restrict the exercise of shareholders’ rights.
The centerpiece of the campaign was Nobuaki Kurumatani, then Toshiba’s chief executive who had a sharp vote to approve his reputation as a strictly survivor. He renounced April amid fears it may fail to gain approval at the 2021 annual meeting later this month and following a $ 20 billion takeover bid from private equity group CVC.
The report, compiled by three lawyers including the head of the Tokyo office O’Melveny & Myers, accuses the Japanese conglomerate of having drawn up “a plan to effectively prevent shareholders from exercising their shareholder proposal. and voting rights at the AGA giving undue influence to shareholders ”.
In a very revealing text message, Kurumatani told one of its senior executives that Toshiba’s efforts to suppress the movements of activist investors will not be entrusted to its financial advisors – Goldman Sachs and Nomura – but will be dealt with. mainly by the government. He is quoted as writing: “METI is going to play the lead role this time.”
The scandal surrounding Toshiba’s AGA 2020 has been, for many investors, the culmination of five years of extraordinary turmoil in Japan’s most famous industrial conglomerate. A series of calamities have included accounting fraud, the collapse of the U.S. nuclear unit, the sale of the precious chip business and a reduction strictly avoided by the Tokyo Stock Exchange. Investors have long suspected that Toshiba enjoys unusually high levels of protection from the Japanese government, and that shareholder interests have been constantly suppressed.
Toshiba was forced to accept the independent probe after losing it a proxy battle with its largest shareholders in March.
One of Toshiba’s shareholders said that his findings “confirm our deepest and worst fears about the relationship between the Japanese government and its largest corporations.” The question everyone is facing now is whether it was an isolated incident. ”
The report contrasts sharply with Toshiba’s internal investigation into the meeting, which concluded that there were no problems.
“There is no shareholder or director that I will support a few candidates who have been nominated by the company for the next AGM,” Raymond Zage, non-executive director of Toshiba, told Financial Officer. Some time later the report was released. The information previously provided to the council on the issue of participation in METI, he added, was “highly misleading”.
The report is particularly damaging to the reputation of Hiromichi Mizuno, the former head of the $ 1.6 billion government pensions investment fund (GPIF) in Japan, a member of the board of trustees. Tesla is a high-profile champion for ESG investors around the world.
Mizuno’s efforts, which were first revealed by the FT, have focused on influencing the vote of the Harvard Management Company – one of Toshiba’s largest shareholders at the time. At last year’s AGM, Mizuno acted as executive advisor to METI: the report concludes that he used this position to influence HMC to the point where he abstained from voting at the meeting.
The report also called into question the account of Mizuno’s events. In March, Mizuno told FT: “I told Harvard very clearly that I did not represent the Japanese government. I proposed to give them [Harvard] a better understanding of the situation in Tokyo on a friendly basis ”.
On Thursday, Toshiba and METI said they would review the report. Mizuno, described as “Mr. M” in the report, was not immediately available for comment. Both Mizuno and METI have previously denied the FT acting according to government instructions.