FUKUI – A Kumagai Gumi Co. shareholder filed a suit Tuesday demanding that current and former management of the troubled construction firm return money donated to the Liberal Democratic Party and halt further political contributions.
Kazuyoshi Yuoka, 59, filed the suit with the Fukui District Court, demanding that 87 million yen in political donations made to the ruling LDP over a period of four years while the contractor was in financial difficulty be returned to the company.
The lawsuit also demands that current executives make no further contributions.
According to the suit, Kumagai Gumi contributed 87 million yen to the LDP’s political fund-managing organization between January 1996 and December 1999.
The general contractor posted 242.6 billion yen in extraordinary losses in the business year that ended in March 1998 and 577.1 billion yen in the year to last March.
Yuoka is a member of the Osaka-based Shareholder Ombudsman, a civic group that has previously filed lawsuits against major Japanese companies, including Sogo Co. and Nomura Securities Co., alleging corporate negligence of the rights of individual shareholders.
The suit says that as Kumagai Gumi was actually in debt from 1995, the donations constituted a violation of the Political Fund Control Law, which bans a company in capital deficit from making political donations.
Kumagai Gumi, which specialized in large-scale civil engineering projects, first suffered serious solvency problems in the early 1990s as a result of excessive real estate investments at home and abroad during the late-1980s asset price bubble.
A group of 15 creditor banks, led by the then Sumitomo Bank, recently agreed to forgive 430 billion yen in loans.
The company’s plan to reduce its capital by 65 billion yen to 17 billion yen on March 1 won approval from its shareholders at an extraordinary meeting in January.
The move was part of a major restructuring plan it agreed to in late December
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