Two relatives of former Sogo Co. Vice Chairman Moriichi Inoue bought all outstanding shares of an affiliate of Yokohama Sogo around April, when the management of the failing department store chain announced it would step down, it was learned Thursday.
According to sources familiar with the case, Inoue’s son and son-in-law bought all outstanding stock of NGC Co., a mail-order subsidiary of Yokohama Sogo, which is based in Tokyo’s Shibuya Ward. Inoue was also a member of Yokohama Sogo’s board.
A former Sogo executive admitted that, given the timing of the move, it could be interpreted as an attempt by Inoue to secure a new source of personal income, as he may have sensed that Sogo’s failure “seemed only a matter of time.”
NGC, which sells men’s and women’s apparel by mail order, was set up in December 1962, and Yokohama Sogo purchased all of the firm’s shares in February 1989, sources said.
Last April, Sogo unveiled a restructuring plan that included requests for debt forgiveness by its main creditor banks. To take responsibility, former Sogo Chairman Hiroo Mizushima resigned on April 26, and other top management officials followed suit.
The sources said Inoue’s eldest son and his son-in-law together purchased from Yokohama Sogo all 60,000 NGC shares for 30 million yen on April 19.
Sogo officials claimed that the sale of the shares was due to the group’s desire to concentrate on its main department store business. Officials at NGC refused to discuss the transaction.
After Sogo filed for court-mediated rehabilitation on July 12, Inoue stepped down as an NGC board member, but his son and son-in-law are currently board members with representative rights.
In early August, NGC issued 20,000 new shares, which were sold to Fancl Corp., a cosmetics and food supplement firm listed on the Tokyo Stock Exchange.
Inoue, along with other former Sogo executives, is currently facing a lawsuit in which the current Sogo management is demanding some 2.7 billion yen in damages to cover losses the firm incurred in connection with a bogus deal with an affiliated sewage treatment plant operator.
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