Nishikawa's return subject to conditions
Will the reappointment of Japan Post Holdings' incumbent directors improve the corporate culture of the scandal-tainted company?
The government, as the company's sole stockholder, approved the reappointment of all of Japan Post Holdings' nine directors, including Yoshifumi Nishikawa as president, at a general meeting of shareholders held at its head office in Kasumigaseki, Tokyo, on Monday. The decision on personnel was then finalized with the approval of Internal Affairs and Communications Minister Tsutomu Sato, who is responsible for overseeing Japan's postal system.
The government decided to let the current management continue to operate Japan Post after it examined and accepted the company's responses to its business improvement order--imposed after the envisaged sale of Kampo no Yado hotels and resort facilities at unreasonably low prices came to light--and the company's punitive actions against the employees involved, including pay cuts for Nishikawa and the other directors.
However, a majority of the public are very critical of Nishikawa's reappointment, according to several opinion polls. The opposition Democratic Party of Japan said that it would fire Nishikawa if the party wins the upcoming House of Representatives election and takes power. Nishikawa should run the company in a humble manner, considering his reappointment as Japan Post president is subject to conditions.
The bidding on the Kampo no Yado hotels was handled in a very suspicious way with higher bids not chosen and no record kept of the negotiation process.
Staff held accountable
Four of the company's senior officials, who came from Sumitomo Mitsui Banking Corp. and were known as "Team Nishikawa," have been held responsible for that and will be dismissed soon to return to the bank. But, Nishikawa, too, bears heavy responsibility for letting his staff get out of control.
According to the company's business improvement plan, Japan Post will establish a new management advisory committee to monitor its problem-plagued management system. The company will also create a new post of chairman and appoint one of the external board members to the post. The chairman will double as head of the committee. To accomplish the improvement plan's aims, the current external board members who overlooked the scandals should not stay, but should be replaced with new members invited from outside the company.
According to Japan Post's plan, the Kampo no Yado enterprise, which is the original cause of the whole problem, posted a deficit of 5.4 billion yen in fiscal 2008 but should move into the black in fiscal 2011.
The turnaround is intended to allow Japan Post to sell the resort facilities at higher prices, but can Japan Post end the hotels' chronic deficits through only such conventional measures as developing a new customer base and reducing labor costs?
The Kampo no Yado hotels are required to be either sold or shut down and liquidated by autumn 2012. If business conditions remain tough, such as lingering doldrums in real estate prices, Japan Post should consider the option of disposing of those facilities with huge deficits first, but waiting for better circumstances to sell the others.
In the privatization of postal services, it is necessary to both promote efficiency and and preserve the universality of services such as mail delivery. We must closely monitor the postal service privatization to prevent it from focusing exclusively on efficiency and make it an instance of privatization the public can consider a success as the internal affairs and communication minister said.
Both Japan Post Bank and Japan Post Insurance will be fully privatized by October 2017.
But, the two companies will be criticized for "oppressing private companies" if they try to expand their businesses to seek sufficient revenues in preparation for full privatization. It is essential for them to sufficiently explain their actions to win the public's understanding.
However, Nishikawa seems to be insincere at times as he refused to hold press conferences on some important occasions, such as when he gave the final business improvement report to the Internal Affairs and Communications Ministry. We would like to ask him to be fully accountable as president of Japan Post Holdings.
(From The Yomiuri Shimbun, June 30, 2009)