The government will present on Friday a new interpretation of JR-related bills being prepared to justify forced payment by seven group companies to shoulder some of the 28 trillion yen debt left by the former Japanese National Railways.The reinterpretation has been unofficially cleared by the Cabinet Legislation Bureau, and the Cabinet is expected to give its approval Friday, Transport Ministry officials said.Under the reinterpretation, forced payments cannot be regarded as violating the firms’ property rights if a law’s intention is to promote public welfare. The Cabinet is also to confirm that when the government forces the burden onto the firms, JR’s board members must not be held responsible for accepting it, the officials said. This means the JR executives can win damages suits brought by shareholders even if they give in to government pressure to pay more.Based on the Cabinet agreement, the ministry will submit bills to cope with the debt currently held by JNR Settlements Corp. by Feb. 10. This will give the government a chance to force the JR carriers to take the additional burden.The semipublic JNR Settlements Corp. inherited the debts of JNR in 1987 and was charged with repaying that debt by fiscal 1997 by selling the defunct firm’s remaining stock and assets. The plan failed.Based on a new framework drawn up late last year, the burden the government is asking the carriers to bear is 360 billion yen of the roughly 940 billion yen needed to merge a mutual fund for former JNR employees with the Employees’ Pension Insurance fund.Of the 27.8 trillion yen in debt estimated as of last April, pension costs for JNR employees account for 4.3 trillion yen, including the pension transfer. However, the firms strongly oppose any further burden, pointing out the 14.5 trillion yen in debt they inherited when the JNR was privatized into today’s JR firms. The carriers claim that the pension fund transfer cost issue was settled in 1996 when the JR firms agreed to pay about 170 billion yen and JNR Settlements Corp. took over the remaining pension costs of 770 billion yen.The JR firms maintain that it is unreasonable for the government to change the agreement. However, the Transport Ministry has argued that the settlement was a temporary deal until fundamental measures to cope with the debt were hammered out, and that it is reasonable for the companies to bear the pensions for their employees.”To burden JNR Settlements Corp. with the pension costs was a transitional measure on the assumption that a fundamental measure would be drawn up,” a ministry official said. The ministry maintains that the additional burden covers part of the pensions of former JNR employees who now work for the JR firms, claiming the burden may be forced, but it is a reasonable cost.The carriers claim that if they accept a further burden related to the JNR debt issue, their board members would possibly face lawsuits by shareholders for causing damage to the firms.Of the seven JR firms, Central Japan Railway Co. (JR Tokai), East Japan Railway Co. and West Japan Railway Co. are listed on the Tokyo Stock Exchange.”If investors get the impression that the government can impose an unreasonable burden on firms that have been privatized, we have to ask for understanding that the impression is wrong. The proposed burden may be forcible, but it has legal grounds,” the official said.
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