SAPPORO – Snow Brand Foods Co. shareholders approved a management proposal Friday to dissolve the scandal-hit firm next week, entrusting the company’s president and five other board members with the task of winding up remaining business.
Under the proposal, the dissolution will occur Tuesday.
“We have judged it is impossible to reconstruct the company as it has become difficult to tie up with other companies,” Snow Brand Foods President Koshiro Iwase told a group of around 90 shareholders at the start of the two-hour extraordinary meeting. “We apologize deeply for causing annoyances as a result of those product mislabeling incidents.”
Iwase took over as president in February, when Shozo Yoshida resigned to take the blame for a string of deliberate food-mislabeling scandals.
Earlier, the company admitted to passing off Australian beef as Japanese beef to benefit from a government buyback scheme introduced in the wake of the discovery in September of mad cow disease in Japan.
During the meeting, the shareholders appointed the six to take charge of liquidation proceedings, including handling litigation, collecting sales credits and helping find jobs for employees.
The company, along with its parent, Snow Brand Milk Products Co., originated in a Hokkaido dairy products sales union set up in 1925.
Iwase attributed the mislabeling to employees’ lack of respect for the law and an inadequate in-house supervisory regime to counter fraudulent business activities. He said board members were not implicated in mislabeling the products.
After the meeting, a 72-year-old shareholder from Asahikawa, Hokkaido, aired his plight.
“I bought 37,000 shares in late January before the mislabeling incident came to light,” he said. “I want them to return even a small part of the combined face value of the shares.”
A former Snow Brand Foods employee who bought 500,000 yen worth of shares in the company 20 years ago said, “My shareholdings have become paper trash, although the company used to recommend that employees buy its shares.”
Snow Brand Foods, 65 percent owned by Snow Brand Milk Products, dismissed 800 of its 930 regular employees at the end of March. Of the 800, only 300 have been able to find work.
The government buyback scheme was introduced in October to incinerate about 12,600 tons of beef from Japanese cows butchered before nationwide cattle testing for mad cow disease began Oct. 18.
Snow Brand Foods’ Kansai meat center in Hyogo Prefecture was found to have sold 13.8 tons of Australian beef to the Japan Ham & Sausage Processors Cooperative Association by disguising it as Japanese beef.
Later, Snow Brand Foods was found to have falsified labels on Hokkaido beef as that from Kumamoto Prefecture, believed to be safer. because two of the three cattle confirmed infected with mad cow disease were from Hokkaido.
Amid the subsequent uproar, Snow Brand Foods shut down its four meat centers across Japan and quit the meat business.
Snow Brand Foods is set to incur a 19.5 billion yen net loss in closing full-year books for fiscal 2001, with a negative net worth of 13 billion yen, Iwase told shareholders. The firm’s liabilities currently total 31 billion yen.
Snow Brand Foods will incur a combined loss of 24 billion yen associated with its dissolution. Its parent, Snow Brand Milk Products, will cover the loss by funneling 25 billion yen into the subsidiary.
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