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Japan Highway Public Corp. President Haruho Fujii on Monday defied an order by transport minister Nobuteru Ishihara to resign, forcing Ishihara to begin the formal process of sacking him.

Fujii called the minister’s secretariat shortly before noon Monday and said he wanted to “refrain from writing his resignation himself.”

On Sunday, Ishihara told the head of the troubled expressway operator to step down to take responsibility for the semigovernmental firm’s controversial balance sheet.

Fujii’s rebellion casts doubt over the control Ishihara and the ministry have over the entity. It could also stand in the way of the government’s efforts to privatize four public expressway operators in fiscal 2005.

“It is regrettable that (Fujii) refused to act in accordance with (the minister’s) order,” vice transport minister Noriyuki Kazaoka told a regular news conference. “We had expected him to make the proper decision.”

Under Article 13 of the Japan Highway Public Corporation Law, the transport minister can remove executives of the public corporation if they are deemed unfit for the job.

According to ministry officials, it is the first time a process has been launched to remove an official ranked director or higher.

The Land, Infrastructure and Transport Ministry is required under the Administrative Procedures Law to conduct a hearing to hear Fujii’s version of events. A ministry official must first be selected to preside over the hearing, then the ministry must notify Fujii in writing, including reasons why he is facing dismissal.

Kazaoka said the transport ministry will begin looking for Fujii’s replacement after the hearing process is completed. The vice minister said he had no idea how long the process will take. In the meantime, Fujii will remain in his post.

Fujii will receive details of the hearing Tuesday, Ishihara said. It will take roughly 10 days to convene the hearing, and the entire process to fire Fujii will take up to three weeks, he said.

Ishihara said that when he telephoned Fujii on Sunday night to tell him to submit his resignation by noon the following day, the Japan Highway chief responded, “I understand.”

Fujii must be removed from his post, according to Ishihara, because he has failed to convince anyone of the credibility of Japan Highway’s balance sheet and has given erroneous accounts of the issue in the Diet.

The minister said Fujii, who has been criticized for ruling the public entity with an iron fist, has thrown Japan Highway into turmoil. His actions have invited criticism and created an atmosphere of distrust among the public, Ishihara said.

But Fujii told the minister’s secretariat during the telephone call Monday that Ishihara simply did not understand his explanation of the balance sheet issue.

Fujii issued a statement Monday evening saying he felt brokenhearted when he decided against submitting his resignation.

In the statement, Fujii said that during a five-hour meeting on Sunday, Ishihara failed to clearly state why he should resign. Speaking to reporters later, however, Ishihara said Fujii should step down because he could not provide an adequate explanation of the balance sheet issue.

“It is utterly regrettable that Minister Ishihara did not understand the fact that myself and all the Japan Highway staff have done our best for the sake of reform,” Fujii said. “As I have repeatedly said, I’m not the kind of a person to cling to his post, and I intend to accept a personnel change if there is good reason behind it.”

But the turn of events “makes it utterly impossible for me, as president, to agree” to step down, Fujii said in his statement. “This (decision) was also made to defend the honor of all corporation staffers who are working for reforms.”

The same day, Chief Cabinet Secretary Yasuo Fukuda expressed displeasure at Fujii’s resistance.

“It is undesirable for this kind of situation to continue,” Fukuda told a news conference Monday afternoon. “I would like to see new management (installed at Japan Highway) as soon as possible in order to begin reforms.”

A balance sheet released by Japan Highway in June shows it had a positive net worth of 5.76 trillion yen as of March 31.

But according to the so-called secret balance sheet compiled last year by an in-house project team, Japan Highway has a capital deficit of more than 600 billion yen.

That document came to light in July, when one of Japan Highway’s senior officials revealed its existence in an article he contributed to a monthly magazine. The balance sheet was purposely hidden, according to the official, due to fears that its contents would prevent the expressway operator from continuing to build new expressways after being privatized.

But Fujii said in his statement that he told Ishihara during their Sunday meeting that there was only one official balance sheet compiled by Japan Highway. The June balance sheet was drawn up by some of the most noted accounting experts in the country, according to Fujii.

He said the other balance sheet was produced by a group of Japan Highway officials who used ambiguous data. Fujii said that neither he nor any senior official issued an order to hide it.

If Fujii had resigned voluntarily, he would have received a retirement allowance worth some 26 million yen. He will forfeit this if he is sacked.

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