• Bloomberg


Fujitsu Ltd. has drawn renewed calls from investors to shed more light on the departure of former President Kuniaki Nozoe after the Tokyo Stock Exchange ended a probe Tuesday into the conflicting reasons given by the firm.

The TSE ended its probe of Fujitsu after determining the company didn’t mislead investors enough to warrant further action. In response, the nation’s largest provider of computer services said it will strive to disclose information appropriately.

Fujitsu last week said it ousted the former president because of possible ties to a company with an “unfavorable reputation,” rescinding the earlier explanation he quit for health reasons. Nozoe’s dismissal was inappropriate, according to his lawyer. The bourse’s conclusions may prolong concerns over Fujitsu’s transparency, said Mitsushige Akino, a fund manager at Tokyo-based Ichiyoshi Investment Management Co.

“We need to get to the bottom of why this happened,” said Akino, who oversees about $450 million at the Tokyo-based asset manager. “This doesn’t put the issue to rest.”

The exchange’s conclusion removes the risk of the stock being placed under special watch, Morgan Stanley analyst Masaharu Miyachi wrote in a report. Still, investors will probably remain concerned about corporate governance and the risk that former management had ties to inappropriate corporations, Miyachi wrote, without elaborating.

“You have to be a little skeptical about the company’s governance and its stance on disclosure,” said Junichi Misawa, head of the equity investment division at Tokyo-based STB Asset Management Co., which manages the equivalent of $14 billion. “The explanation is still lacking.”

Fujitsu shares began falling this week after Nozoe’s request to nullify his resignation prompted the Tokyo-based company to alter its explanation of the departure. Nozoe continued to have ties with an unidentified company even after Fujitsu told him that would be “inappropriate,” Fujitsu said in a March 6 weekend statement. On Sept. 25, he accepted the board of director’s offer to resign, it said.

Nozoe, 62, was improperly forced out and he denies having ties to “antisocial forces,” or organized crime, as Fujitsu claims, said his attorney, Kei Hata. Fujitsu told Nozoe his relations with a fund involved in the potential sale of Fujitsu subsidiary Nifty Corp. was improper because the fund had connections with organized crime, Hata said in an interview. The fund didn’t have connections with “antisocial forces,” Hata said, declining to identify the fund.

Etsuro Yamada, a Tokyo-based spokesman at Fujitsu, declined to elaborate beyond the company’s public statements when asked about Hata’s comments.

The TSE said Tuesday it issued a “strict” warning to Fujitsu for initially claiming Nozoe resigned for health reasons. Still, the inadequacy of the Sept. 25 disclosure wasn’t significant enough for investors to make erroneous investment decisions, the bourse said.

“We’re not an investigative body,” said Ikue Izawa, a spokeswoman at the bourse.

“We share information and have links with the authorities, but there are limits to what we can do.”

While analysts at Morgan Stanley, Mizuho Securities Co. and Deutsche Bank AG have voiced concerns over Fujitsu’s disclosure practices this week following the dispute with Nozoe, some investors said the controversy may not last.

“In a short period, investors will forget this unless there’s more hard news,” said Edwin Merner, Tokyo-based president of Atlantis Investment, which manages about $3 billion in assets. “In a few months, this will all be forgotten.”

During Nozoe’s 15-month stint, the firm pushed ahead with the sale of its hard-disk drive business to Toshiba Corp. and agreed to outsource some chip production to Taiwan Semiconductor Manufacturing Co. to cut spending.

The company also sought to strengthen its operations in Europe by making Netherlands-based Fujitsu Siemens Computers Holding BV a fully owned subsidiary.

The controversy comes as Fujitsu is trying to transform itself into a provider of services similar to International Business Machines Corp. and moving away from unprofitable hardware businesses after posting a ¥112.4 billion loss in the year that ended last March. Fujitsu forecasts a ¥95 billion profit for this fiscal year.

On lingering concerns, Ichiyoshi Investment’s Akino said: “There’s a big gray area here and that gray area encourages speculation. The company had relationships it shouldn’t have had, so people will say, ‘is that the kind of company this is?’ “

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