Fujitsu Ltd. shareholders should vote the company’s chairman and a director off the board for ousting former President Kuniaki Nozoe amid accusations of ties to organized crime, proxy advisory firm Glass, Lewis & Co. said.
After saying in September Nozoe left for health reasons, Fujitsu in March said the executive stepped down after recognizing he had a relationship with an investment fund suspected of ties to “antisocial forces,” a euphemism in Japanese for organized crime. Nozoe is seeking reinstatement at the company, Japan’s biggest computer-services provider.
“The board has intentionally misinformed investors and the market,” Glass Lewis said in a report today, advising shareholders to dismiss Chairman Michiyoshi Mazuka, and board member Hiroshi Oura. The two executives of the company “broke the inherent trust placed in its board of directors.”
The statement singled out Mazuka and Oura, the longest-serving director, for dismissal because they are the only board members planning to stay on in the wake of the controversy. Nozoe has said Mazuka, Oura and other Fujitsu executives interrogated him for an hour in a windowless room on Sept. 25 and forced him to resign, alleging he did business with someone involved with organized crime, an accusation Nozoe denies.
“They have had problems with disclosure and they clearly need to work on it,” said Naoki Fujiwara, a fund manager at Shinkin Asset Management Co. in Tokyo, which oversees about $6 billion in assets. Fujiwara declined to say whether Shinkin owns Fujitsu shares.
Election of Directors
Six of Fujitsu’s serving nine board members, including Senior Executive Advisor Naoyuki Akikusa, are slated to step down on June 21, when the board next meets. Fujitsu said on March 24 it would reorganize its board. The third incumbent to stand for re-election is an external director.
The infighting between Fujitsu and its former boss, which became public on March 5 when the Asahi newspaper reported Nozoe wanted his job back, also sparked a defamation lawsuit. Sandringham Private Value, an investment firm, on April 15 filed a suit seeking 330 million yen ($3.6 million) in damages against Mazuka, Oura and Akikusa, claiming they damaged the fund’s reputation by implying it had links to organized crime.
A day earlier, the Tokyo-based company gave its version of events in a press conference during which Mazuka said Nozoe chose to submit his resignation after being presented with the fact that he had a “close relationship” with representatives of a company suspected of having ties to antisocial forces. The company wasn’t identified.
Fujitsu rose 3.5 percent to 591 yen as of 12:54 p.m. in Tokyo. The shares have gained 1.9 since March 5. The benchmark Nikkei 225 Stock Average has dropped 2.4 percent in the period.
“It’s regrettable to see this advice because we’ve tried to provide a full account of the issue,” Fujitsu spokesman Etsuro Yamada said by phone today in response to the statement from Glass Lewis, a San Francisco-based firm that researches companies, provides proxy voting services and advises institutional shareholders.
Fujitsu has rejected requests by Nozoe that the company set up an independent committee to investigate his dismissal and the allegations he had mafia connections. Ties with organized crime are grounds for delisting, according to rules adopted in 2009 by the Tokyo Stock Exchange.
‘The company went to great lengths to provide investors and the TSE with fabricated information regarding Mr. Nozoe’s resignation,” Glass Lewis said in the statement. “Shareholders can no longer be certain that they will receive an accurate account of goings-on at the company.”