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Tokyo claims innocence as Toshiba shareholder plot claims intensify

Japan’s trade minister was unapologetic about his ministry’s dealings with the struggling giant over allegations the firm’s board and government worked together to pressure foreign stakeholders

Once a crown jewel of corporate Japan, Toshiba has been battered by scandals stretching back to 2015.

Japan’s trade minister was unapologetic about his ministry’s dealings with the struggling giant over allegations the firm’s board and government worked together to pressure foreign stakeholders


Japan’s trade minister resisted calls on Tuesday for a probe into claims Tokyo and Toshiba colluded to pressure foreign stakeholders in the company, in the latest bad news day for the ailing conglomerate.

The allegations, made by an independent investigation, that Toshiba chiefs and Japan’s government leant on investors to back company management in a key vote, were dismissed as normal by Hiroshi Kajiyama, head of the Ministry for Economy, Trade and Industry (METI), when matters of national security were at stake.

It’s claimed one executive said they would ask the trade ministry to “beat up” a hedge fund – Harvard University’s endowment fund – telling them it could be subject to a regulatory probe if the fund did not follow management’s recommendations for board nominees at Toshiba’s AGM last July.

The Harvard fund subsequently abstained from voting.

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Toshiba is of strategic importance to Tokyo as a maker of nuclear reactors and defence equipment and the shareholder-commissioned probe’s findings mark an explosive turn in a long battle between the Japanese company’s management and foreign shareholders, which include activist investors and the Harvard fund.

“We merely implemented policies that were natural for METI,” Kajiyama told a regular post-cabinet news conference.

But one Toshiba shareholder has called it the world’s worst corporate scandal in a decade.

The probe also found that Toshiba, with the ministry, tried to force Toshiba’s top shareholder, Singapore-based Effissimo Capital Management, to withdraw shareholder proposals for board nominees aimed at improving governance.


In the wake of the report, Toshiba has said two board members will not be standing for re-election although Board Chairman Osamu Nagayama, on Monday, resisted calls to step down.

Once a crown jewel of corporate Japan, Toshiba was battered by accounting scandals that stretch back to 2015 and massive writedowns for its US nuclear business as well as the sale of its semiconductor unit, leaving it a shadow of its former self.

The report was commissioned by shareholders, who voted in March for an independent investigation into allegations investors had come under pressure from the company. That vote was seen as a watershed moment for shareholder activism in Japan.

Following a 2017 capital raising, a number of foreign funds invested in Toshiba, making an uneasy marriage of activist investors and a key strategic asset.


Since then, Toshiba has seen former CEO Nobuaki Kurumatani resign and the ensuing turmoil lead to a $20 billion bid for the conglomerate from CVC Capital.

CVC’s offer to take the Japanese conglomerate private and retain incumbent management was perceived by some in the company as designed to shield Kurumatani from activist shareholders, Toshiba sources have said.

While Toshiba has dismissed that bid, it has announced it will conduct a strategic review.

Activist investors are estimated to account for about 25% of Toshiba’s shareholder base – an unusually large proportion after the company, on the verge of collapse, had to quickly issue some $5.5 billion worth of shares in 2017.


  • Reporting by Reuters


Read more:

Toshiba CEO resigns after storm over a $20-billion buyout bid

CVC makes $18 billion offer to take Toshiba private


Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.


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