Department store operator Sogo Co. said Monday that it will set up a panel to examine management responsibility as a way to obtain public understanding for a controversial government bailout plan.
The internal task force will demand that former Chairman Hiroo Mizushima and other former executives responsible for the company’s financial problems hand over personal assets to help cover the company’s debts, Sogo said.
Sogo said it plans to set up the panel in the near future in consultation with the Financial Reconstruction Commission and the Deposit Insurance Corp.
In the face of special parliamentary sessions slated for July 17 and 18 to discuss the Sogo bailout plan, the company said the panel will also consider pursuing the management’s civil and criminal liabilities.
The panel, which includes outsiders such as lawyers and certified public accountants, aims to reach its conclusions by the end of this year, it said.
The House of Representatives Finance Committee plans to have Mizushima testify as an unsworn witness at a special session next Monday. A House of Councilors panel on measures to revive the financial system and economy will summon him the next day.
The government’s FRC approved June 30 a plan to have the state-run DIC buy 200 billion yen in loans to Sogo from Shinsei Bank with an eye to waiving 97 billion yen of the total.
It prompted 72 other creditors to pledge to forgive 630 billion yen of Sogo’s 1.7 trillion yen in debts, as well as controversy over using taxpayers’ money to save a private company.
Under Mizushima, who assumed Sogo’s presidency in 1962, the Sogo group followed an expansionary business strategy of increasing retail outlets financed by huge bank loans.
But the burst of the asset-inflated bubble economy in the early 1990s led to the current difficulties for both his company and creditor banks.
The DIC is to buy Shinsei’s loans to Sogo because it and the owner of Shinsei Bank, formerly the Long-Term Credit Bank of Japan, agreed in February that the DIC would do so when the market value of Shinsei’s loans lose more than 20 percent from their book values.
A private-sector consortium, led by Ripplewood Holdings LLC of the United States, on March 1 bought the LTCB, which was placed under state control in late 1998 after collapsing under the weight of huge loan losses. Ripplewood relaunched it June 5 under the new name.