More than 7,000 police officers were out in force nationwide Thursday to provide security for 2,161 corporate stockholders’ meetings held during the day.
The National Police Agency confirmed the attendance of 43 known “sokaiya” corporate racketeers at the meetings of 31 firms, compared with 86 at 46 companies a year ago. The figure was the lowest since payoffs to such racketeers were banned under the revised Commercial Code in 1982.
According to the NPA, 1,930 companies sought police protection against possible disruption of their stockholders’ meetings by racketeers.
No serious problems were reported at the day’s meetings, except for the arrest of one racketeer at a Tokyo-based company for illegally entering the venue, the NPA said.
Sokaiya are a unique breed of racketeer who attend stockholders’ meetings by obtaining a minimum amount of shares in a firm and then extort money from companies by raising, or threatening to raise, awkward questions. Some companies are known to buy their silence.
The NPA estimates there were 400 sokaiya in Japan as of the end of 1999, despite periodic police crackdowns against them.
Police believe sokaiya are showing signs of increased activity as a result of a rise in corporate scandals as well as turmoil that has affected companies in the process of restructuring.
Police said the 7,400 officers mobilized Thursday focused on the security of meetings of companies that had sought police protection.
Most Japanese firms close their books March 31, and many choose the same day to hold their shareholders’ meetings.
Even though the number of same-day stockholders’ meetings has apparently declined over the past three years, on Thursday some 950 companies held their meetings in Tokyo alone.
They were protected by 3,300 officers from the Metropolitan Police Department, officials said.
In Osaka, police said most of the 327 companies that had their shareholders’ meetings Thursday had sought police protection.
Osaka police said they mobilized 1,500 officers to cover the meetings.
Major machinery maker Kubota Corp., whose executives were arrested earlier this month on suspicion of paying sokaiya, in violation of the Commercial Code, finished its shareholders’ meeting in Osaka without much turmoil.
Two Kubota executives resigned after the incident came to light. Kubota President Yoshikuni Dobashi and Chairman Osamu Okamoto also said they would go without pay for six months as a penalty.
At the beginning of the shareholders’ meeting at the company’s headquarters in Naniwa Ward, Dobashi told the 309 stockholders present: “We are extremely sorry for causing the incident, and we apologize to shareholders.
“We will make utmost efforts to establish corporate ethics and prevent a recurrence of such an incident,” he added.
One shareholder called on Dobashi and Okamoto during the meeting to resign and demanded that the executives pay compensation for the money that had been paid to sokaiya.
Dobashi, however, responded that it is his responsibility to stay in the position and win back public trust. He also said he will impose appropriate penalties on other executives after details of the incident become clear.
Among other companies that held shareholders’ meetings Thursday, some executives faced tough questions over their firms’ involvement in scandals and accidents.
The president of Sumitomo Metal Mining Co. apologized to shareholders for the nation’s worst nuclear accident, which occurred last September at a JCO Co. plant in Tokai, Ibaraki Prefecture. JCO is owned by Sumitomo Metal Mining.
At the stockholders’ meeting in Tokyo’s Minato Ward, Sumitomo President Koichi Fukushima said, “We apologize for causing a great amount of trouble due to the deadly accident.” He then bowed deeply, along with all the other board members present.
In response to shareholders’ questions about the cause of the accident, one executive would only answer that “we would like to wait and see the result of the investigation (by authorities).”
Expecting more shareholders to attend than usual because of the nuclear accident, Sumitomo prepared extra seats in the room, a company official said.
“I think the company handled the criticality accident in good faith,” a stockholder said.
At the shareholders’ meeting of Kyoto-based Nichiei Co., whose coercive method of collecting debts has been investigated by police, shareholders fired off questions about the scandal, extending what is usually a 30-minute meeting to 21/2 hours.
The meeting officially approved that Nichiei founder Kazuo Matsuda, who resigned as president in February, step down from the board as well. It also approved that the company provide Matsuda with a retirement allowance.
“Although I anticipated that the meeting would be much worse, most questions were constructive,” one shareholder said. “I even gained a good impression of the new president, who answered questions honestly.”
“I am angry that the former president (Matsuda) was not there,” he added.
At the headquarters of Yakult Honsha Co. in Tokyo’s Minato Ward, President Sumiya Hori apologized to shareholders for the scandals over the company’s purchase of so-called Princeton bonds, issued by Cresvale Securities Co., which caused enormous financial damage to the firm.
Many shareholders, some angrily, demanded that Hori take responsibility for the scandal. Hori said he would remain president to fulfill his duties.