Apologies abound as firms face investors

Kyodo

The annual flurry of shareholders’ meetings peaked Thursday as 1,045 companies met with investors nationwide, according to police estimates, including several scandal-hit firms that offered ritual apologies and pledges to restore credibility.

Among them, Olympus Corp. President Hiroyuki Sasa pledged to make utmost efforts to restore trust and improve its corporate value after the camera and medical equipment maker admitted to covering up bubble-era investment losses that were brought to light by its first foreign president, who was summarily fired.

Daio Paper Corp., whose now-arrested former chairman, Mototaka Ikawa, illicitly lent himself huge sums from company funds to spend on casino sprees, saw 194 shareholders — roughly twice as many as the previous year — attend its meeting in Ehime Prefecture, the firm said.

“We are deeply sorry for causing much trouble and worries,” said President Masayoshi Sako, adding the company will continue to strengthen corporate governance.

The concentrated schedule of the meetings has become increasingly scattered in recent years, with the percentage of Tokyo Stock Exchange-listed firms meeting on the same day coming to 41.6 percent this year, the second-lowest after last year’s 41.2 percent since the recording of comparable data began in 1983, the bourse said.

Mitsubishi Electric Corp. officials also issued apologies in Tokyo after reporting it had been banned from bidding on public contracts for overcharging the Defense Ministry and other institutions for space-related projects.

“We take these facts very seriously . . . and we will work to regain people’s trust as soon as possible,” Mitsubishi Electric President Kenichiro Yamanishi said.

Olympus President Sasa pledged to restore the firm’s sluggish business after reporting a ¥48.9 billion group net loss for the year through March caused partly by the accounting coverup that was designed to conceal ¥117.7 billion in investment losses dating back to the 1990s.

Sasa outlined the camera maker’s medium-term business plan, which centers on focusing its resources on medical and other core operations and restoring its financial health, after the firm suffered a sharp drop in its consolidated capital-to-asset ratio.

“What the new management needs to work on first is to restore the stakeholders’ trust damaged by the scandal and tomake utmost efforts to improve corporate value,” said Sasa, who became president in April.

“We believe our biggest task is to regain stable financial strength,” Sasa said, adding that the company aims to boost its capital adequacy ratio to more than 30 percent by March 2017 from 4.6 percent at the end of the business year that ended on March 31.

The scandal broke when former President and Chief Executive Officer Michael C. Woodford was fired last October after trying to get to the truth behind dubious acquisitions Olympus reportedly made. Woodford had been CEO for less than a month.

After correcting its faked earnings reports, Olympus’ consolidated capital-to-asset ratio fell to 4.6 percent at the end of fiscal 2011 compared with 11.0 percent at the end of March 2011. To boost its capital, it is negotiating an alliance with Sony Corp.

At the meeting in Tokyo, one shareholder expressed concern about whether Olympus can retain its independence if it accepts investment from another company. Another shareholder asked whether the company is hiding any other problems.

Sasa apologized and said Olympus will enhance governance and compliance.

“We will make full efforts to prevent something like this from happening,” Sasa said. “Even if something was hidden, we will find and report it and deal with it.”

Regarding the capital and business alliance, the company said it has not disclosed any information about specific names and content, although it is discussing the issue with several firms.

“Taking into account present financial conditions, it is very important to seek to increase our capital,” said Senior Executive Managing Officer Yasuo Takeuchi.