Fujitsu Chief Defends Company Governance Amid Scandal
Fujitsu Ltd. President Masami Yamamoto said the company acted appropriately in ousting his predecessor, Kuniaki Nozoe, who has threatened to sue over claims linking him to organized crime.
“The fact that we were able to get a president who was unfit for the job to resign shows the process worked,” Yamamoto, 56, said yesterday in his first public comments on the scandal since taking the job April 1. “Governance worked, although we made some mistakes in communication.”
Japan’s biggest provider of computer services last month said Nozoe stepped down because he disobeyed warnings to stop associating with a fund that has an “unfavorable reputation,” six months after saying he left because of health reasons. Macquarie Group Ltd. last month cut its price estimate for the stock, citing the “unusual” public dispute.
“Disclosure could have been a lot better,” said Naoki Fujiwara, a fund manager at Shinkin Asset Management Co. in Tokyo, which oversees the equivalent of $3.8 billion. “Fujitsu’s governance system seems to be working but the problem is that they haven’t been straight in their communications.”
Fujitsu shares, which have underperformed the benchmark Nikkei 225 Stock Average since Nozoe’s departure, climbed 0.8 percent to 644 yen as of 11 a.m. in Tokyo.
Fujitsu last month said Nozoe quit because of connections to a fund with an “unfavorable reputation,” contradicting a Sept. 25 statement that said he resigned because of illness. That led the Tokyo Stock Exchange to issue a “strict” warning to the company for misleading investors, though the exchange said the issue wasn’t serious enough to warrant further action.
The September statement “was wrong, but the process was not,” Fujitsu’s Yamamoto said.
Nozoe denies Fujitsu’s claim that he had ties to “antisocial forces,” a euphemism in Japan for the Yakuza, or organized crime. On April 7, Nozoe said he may file a defamation suit against two executives involved in his ouster. A week later, Sandringham Private Value, a closely held investment firm, filed a defamation suit against three Fujitsu executives for implying the fund had links to organized crime.
The former president yesterday sent an open letter to Fujitsu, saying the company offered him 270 million yen ($2.9 million) in “hush-money” to keep quiet about the circumstances surrounding his resignation. Yamamoto declined to comment on the letter, saying he hadn’t seen it.
The controversy comes as Fujitsu is trying to transform itself into a provider of services similar to International Business Machines Corp. and move away from unprofitable hardware businesses after posting a 112.4 billion yen loss in the year ended March 2009.
Separately, Yamamoto said Fujitsu is facing a stronger yen and a domestic economy that has recovered more slowly than expected.
The company, which reports earnings on April 30, in July said it’s aiming to more than double operating profit to 200 billion yen during the current business year from an estimated 90 billion yen in the preceding 12 months.
“We haven’t given up on the target, but it’s going to be tough,” Yamamoto said.