This Man’s $120 Million Taps a Nation’s Anger: William Pesek
Stock Chart for Tokyo Electric Power Co Inc (9501)
Something fascinating is afoot in Japan: anger. People are fuming about the nuclear crisis that put their nation in the spotlight for all the wrong reasons.
The response is restrained compared with the perpetually aggrieved Tea Party crowd in the U.S., or Chinese who lash out at anyone abroad with the slightest criticism. Germans are plenty annoyed about bailing out deadbeat nations sharing the euro.
Japan’s 127 million people have a world of defaults before hitting on outrage, so important are harmony, social cohesion and saving face. They’re having none of that as they watch the hapless Tokyo Electric Power Co. operate amid Japan’s worst crisis since World War II.
As this fascinating dynamic raises the collective blood pressure of Japan’s masses, a tantalizing question emerges: Could Tepco be the straw that catalyzes a push for change the nation desperately needs? It may indeed be.
The public is realizing that Tepco is a microcosm of much of what ails Japan. It embodies the incestuous ties between government and industry and an antiquated economic model that undermines Japan’s place in the world.
Tepco’s failings were exposed by a record earthquake on March 11 and a devastating tsunami, followed by breakdowns and radiation leaks at Tepco’s Fukushima nuclear plant. There’s growing recognition that a big crisis might uncover manifold examples of the bureaucracy, inefficiencies, poor strategic planning and lack of vision for a new and better future that hobbles Japan Inc.
For all of that, Tepco has become the poster child. The cluelessness with which it’s operating even today, with the eyes of the world fixed on Fukushima, is trying the national patience like nothing since the 1940s. Prime Minister Naoto Kan’s failure to nationalize Tepco has only heightened concern that no one is in charge.
Once one of Japan’s proudest names, Tepco is now seen by some in the same toxic class as Enron Corp. or Lehman Brothers Holdings Inc. Each day brings new disclosures about how Tepco doctored safety reports and underestimated risks all without holding responsible the company directors who are still collecting their salaries, never mind keeping their jobs.
This last indignity was put in the spotlight by Japan’s richest man, Masayoshi Son, 53. The Softbank Corp. president pledged to donate 10 billion yen ($120 million) and his remaining salary until retirement to help support disaster victims. Any headline-worthy pledges among Tepco board members?
In less-heated times, news that Tepco President Masataka Shimizu checked into a Tokyo hospital for high blood pressure might elicit sympathy.
Still, Japan’s media has offered only muted criticism of Tepco. One reason is respect for the engineers and workers risking their lives for the rest of the nation. We are all in awe of their brave and tireless efforts. Punches are being pulled because local journalists don’t want to cause panic. Also, Tepco has deep pockets and friends in high places.
Media reports are taking on more ominous tones as we learn radioactive materials will be leaking for months. Tepco executives are receiving threats and finding their home addresses posted on the Internet. The company has covered signs at Tepco-employee dormitories and beefed up security.
It’s important to note, though, that this story is bigger than Tepco. The lack of transparency that has been the hallmark of the Fukushima crisis is found much more broadly in corporate Japan. There’s a reason thousands of companies still hold their shareholder meetings on the same day. This ploy limits the risk of probing questions from the floor, a stark reminder that investor rights remain a novel idea.
Japanese are now asking about their rights, and it will be interesting to see where the question leads. In 2009, Kan’s Democratic Party of Japan tossed out the Liberal Democratic Party, which had run Japan for 54 virtually uninterrupted years. The LDP coddled Tepco for decades, allowed unaccountable executives to ride roughshod over the nation and burdened Japan with the largest public debt of any developed nation. Kan has a chance for greatness.
So far, he hasn’t risen to the occasion. Kan often says the right things about putting Japan on more stable footing; the problem is the execution. This is Kan’s opportunity to pull a Franklin Delano Roosevelt. The former U.S. president used anger toward bankers in the 1930s to remake the economy, just as Ronald Reagan used an uncompromising stand against striking air- traffic controllers in 1981 as a battle cry for broader change.
Japan is a terrific place to live. It’s an efficient, clean, prosperous, well-educated and reasonably crime-free nation. Yet it’s run by a generation of insular and barely accountable politicians, bureaucrats and executives with a poor sense of just how rapidly the world around them is evolving.
Kan has shown he sees the bigger picture. Now is the perfect time to change things.
(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)
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