Weekly Japan review, 14th-20th June, 2021

Here is a brief and selective review of the past week’s news relating to Japanese business, finance, investment, the economy and other areas relevant to Crimson Phoenix’s activities.

?Carlos Ghosn

?A number of trials continue in Japan, in the absence of the principal actor in this on-going saga, Carlos Ghosn, who is reported to living in Lebanon. Americans Michael Taylor, a former Green Beret, and his son Peter have famously been accused of masterminding and executing Mr. Ghosn’s escape from Japan concealed in a large box on a private jet. They pleaded guilty to charges made by prosecutors at the Tokyo District Court. If they are convicted, they could face up to three years in jail.

?Mr. Ghosn’s former deputy Greg Kelly is also standing trial in Tokyo for aiding and abetting his boss’s concealment of the amount of remuneration he received from Nissan.

This drama will run for some time to come and will no doubt spawn many more column inches, pages and volumes as well as films and documentaries. The story and its unfolding do provide fascinating insights into many facets of the man, the companies he ran and the governments concerned. One latest publication, described by The Economist as “the clearest account yet of the deep-rooted causes of Mr Ghosn’s predicament”, is Collision Course by William Sposato and Hans Greimel (Harvard Business Review Press). HBR has produced a podcast series based on the book which is well worth a listen: https://hbr.org/podcast/2021/06/the-rise-and-fall-of-carlos-ghosn-part-1

https://hbr.org/podcast/2021/06/the-rise-and-fall-of-carlos-ghosn-part-2

https://hbr.org/podcast/2021/06/the-rise-and-fall-of-carlos-ghosn-part-3

https://hbr.org/podcast/2021/06/the-rise-and-fall-of-carlos-ghosn-part-4

?(Full disclosure: I am featured as a contributor in the series.)

?Corporate governance

?The Nikkei says that the increase in activist activity has been encouraged by changes in government policy designed to modernise corporate governance. The Corporate Governance Code and Stewardship Code that the administration of Shinzo Abe introduced in 2014-5 made it much more acceptable than before for activism to take hold in the country and legitimised their demands. The paper calls Japan an “activists’ heaven”.

?The Financial Times calls for Toshiba shareholders to vote down the entire board at its forthcoming AGM. The role of Osamu Nagayama, independent chairman of the board of directors, is under particular scrutiny. He has admitted responsibility for the confusion at Toshiba but has also insisted that he will sort out the mess by way of taking responsibility.

?The government is hardly spared criticism. Hiroshi Kajiyama, Minister for Economy, Trade and Industry, refused to commission METI’s own investigation into the Toshiba affair and its role in it on the basis that METI merely followed national security guidelines to safeguard Japan’s interests. This stonewalling seems to betray the government’s unease about how it has dealt with the situation, against the very Codes that METI itself was responsible for drafting. The behaviour is typical of an institution that is struggling to keep up with developments in the real world. Which is a pity, as the case can be seen as a golden opportunity to show how the Japanese government thinking has evolved in recent years, an opportunity that has yet again been missed.

?Olympic Games: decision time

?The IOC and JOC will decide on Monday, 21st June, whether to admit spectators to Olympic and Paralympic events and, if so, how many. The Olympic Games open on 23rd July. It is estimated that if the games are held behind closed doors, about $800 million will have to be paid out of public funds to bail it out. Sponsors are obviously most anxious to have as many spectators present as possible. Meanwhile the Japanese authorities at the national and local levels must take full account of the public health risks of having crowds congregate. The decision will be one of the hardest for any politician to make in recent times.