Shareholders give Toshiba chairman the boot following foreign investor voting scandal

Alleged exec meetings with Japanese government detailed in explosive report


Toshiba shareholders voted to oust chairman Osamu Nagayama and a member of the company's audit committee, Nobuyuki Kobayashi, during their annual general meeting.

Nagayama was at the helm during a recent scandal in which an activist investor alleged that Toshiba's execs had conspired with the Japanese government to pressure shareholders to vote in a way that would minimise the influence of activist foreign investors at last year's general meeting.

An independent investigation [PDF], called by Singaporean fund management company Effissimo, alleged that Toshiba and the Ministry of Economy, Trade and Industry had attempted to prevent submission of proposals and votes from activist shareholders.

The report contained allegations that Toshiba and the ministry worked together to "threaten" Effissimo with Japan's foreign investment laws, in an attempt to push the appointment of governance that favoured Toshiba. According to the investigators, Japanese Prime Minister Yoshihide Suga (who was then the chief cabinet secretary) was allegedly briefed on the plan by then-CEO Nobuaki Kurumatani. Kurumatani, who denied recollecting the meeting, resigned in April this year.

Toshiba responded initially to concerns by mixing up and diversifying the players on the board, but it did not prevent shareholders, of which half are foreign investors, from removing Nagayama and Kobayashi.

The vote is a win for Effissimo, which has agitated for change at Toshiba.

Toshiba's statement [PDF] said: "The company recognizes the seriousness of the rejection of some candidates for directors," but offered no other comment than to state that it will announce membership of management and oversight committees after a board meeting due to be held later today.

The removal of Nagayama and Kobayashi is seen as a test of corporate governance in Japan, where removal of board members via investors is uncommon. ®


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