In his Oct. 25 article, "Western media distorts Japan," Gregory Clark tries to justify the reprehensible behavior of certain executives of Olympus.
Doubtless Olympus is a first-rate Japanese company in terms of the products it offers, but to suggest that the news reporting on former President Michael Woodford's sacking typifies the shallowness of much Western reporting in Japan is absurd.
Olympus, like many Japanese companies, made some hugely ill-advised financial investments in the name of zaitech during the bubble era. They invested large amounts of borrowed money in financial instruments that promised a tiny pickup in yield by risking the total loss of the principal amount invested.
When, by the early 1990s, that principal amount had duly disappeared, those companies entered into completely artificial financial transactions whose sole purpose was to avoid or postpone the recognition of those losses and which naturally involved the payment of large fees to creative investment bankers. At the time, these transactions (which later earned the sobriquet tobashi) were probably not illegal, but they defied common sense and were certainly not in the best interests of shareholders.
It is to be hoped that most other companies fessed up and recognized those losses at some point in the following 15 or so years, but Olympus clearly did not. It continued to dig itself into an ever deeper hole.
When Woodford, as the newly elected president of Olympus, discovered what had transpired, he had no option but to reveal what by then clearly constituted criminal behavior and the company's dire financial position that resulted from that behavior.
Does professor Clark need to be reminded that the former company chairman and two other executives pleaded guilty to falsifying the company's accounts in September 2012?
Nobody pretends that the Anglo-Saxon model of corporate governance is perfect, or that it should be imported lock, stock and barrel into Japan. It is, however, the least imperfect model, and Japanese companies are well advised to move closer to international norms.
Transparency is the name of the game. Japan may at the moment be sufficiently cash rich to live by its own set of rules, but that may not last forever.
The opinions expressed in this letter to the editor are the writer's own and do not necessarily reflect the policies of The Japan Times.