Fujitsu, High Level Japanese Corporate Mysteries Continue

By global standards, Japanese companies are seen as taking an idiosyncratic approach to corporate governance.

But even by Japanese standards, a several high-level management changes at the technology giant Fujitsu have struck analysts and management specialists as unusual.

By global standards, Japanese companies are seen as taking an idiosyncratic approach to corporate governance.

By global standards, Japanese companies are seen as taking an idiosyncratic approach to corporate governance.

But even by Japanese standards, a several high-level management changes at the technology giant Fujitsu have struck analysts and management specialists as unusual.

By global standards, Japanese companies are seen as taking an idiosyncratic approach to corporate governance.

But even by Japanese standards, a several high-level management changes at the technology giant Fujitsu have struck analysts and management specialists as unusual.

On Sept. 25, Kuniaki Nozoe, then the president of Fujitsu, says he was called into a windowless room on the 32nd floor of his company’s sleek headquarters near Tokyo Bay.

There, he says, he was accused by several members of Fujitsu’s board of keeping company with “antisocial forces” —

a euphemism here for the yakuza, or Japan’s notorious mafia —

and ordered to resign on the spot. [br]

The company announced he had stepped down “due to illness.”

Mr. Nozoe, who denies any links with the mafia, says he has never set foot in the company since.

He has challenged Fujitsu over his dismissal, submitting a public letter with questions about the company’s allegations and calling for an independent investigation of the board’s actions.

Fujitsu has stuck by its conduct, saying that it acted in the best interests of the company.

“We have disclosed enough information, and we have not said anything inaccurate,” the current president, Masami Yamamoto said at a news conference last month.

Fujitsu declined to make executives or board members available for this article, which appeared in the New York Times.

His ouster was not the first unusual departure in recent years for Fujitsu,

a once-potent force in information technology that battled with I.B.M. in the 1990s to develop the fastest computers

but is now struggling to keep up with nimbler, more dynamic rivals.

In April 2008 Toshihiko Ono, a senior vice president who had been the assumed heir to the Fujitsu presidency, was abruptly removed from office.

Fujitsu accused Mr. Ono of ties to a counterfeiting scheme,

but he was never charged with a crime and he has vehemently denied the accusation through his lawyer.

Mr. Ono left two weeks after Fujitsu announced that its president at the time, Hiroaki Kurokawa, would step down —

to the bewilderment of many in the industry who had applauded his leadership.

In the five years at Fujitsu’s helm, Mr. Kurokawa had turned the company around from a 122 billion yen ($1.3 billion) net loss to a 48 billion yen net profit in 2008,

and he had just started an ambitious management plan that was to run to 2010.

Fujitsu has offered little explanation to investors for any of those three sudden departures. [br]

The company’s stock, which was trading above $40 in New York (800 yen in Tokyo), plunged after the two 2008 departures.

It lost half of its value in the ensuing months, and has only gradually regained part of that ground.

The management upheaval “raises questions about who is really in charge, about who is accountable for Fujitsu’s corporate actions, and whether corporate actions are truly in the best interest of shareholders,”

Damian Thong, a Tokyo-based analyst for Macquarie, wrote recently.

Some management specialists see Fujitu’s case as perhaps an exaggerated example of the way management at publicly traded companies can seem, from the outside at least,

to be subject to personal relationships and even vendettas, with too little objective supervision by corporate boards.

“It’s still common for listed companies in Japan to be run as if management, not shareholders, were the owners,”

said Jamie Allen, who leads the Hong Kong-based Asian Corporate Governance Association.

Many Japanese companies still weight their boards heavily with insiders, specialists say, leaving little opportunity for independent voices on behalf of shareholders.

For example, Toyota Motor, which has come under scrutiny over its slow handling of fatal defects in its vehicles, does not have a single external member on its board. 

In Fujitsu’s case, four members of its nine-member board are current executives.

Of the remaining external members, three are former Fujitsu executives,

including Naoyuki Akikusa, a former president who was chairman until 2008 and is still a senior adviser with an office at the headquarters here …

Lack of investor confidence in Japanese corporate strategy, Mr. Allen said, is one reason Tokyo’s stock market has underperformed.

Financial regulators here are calling for companies to bolster corporate governance, including adding more independent directors.

But experts say the old way still is largely in effect.