Japanese economy minister returns salary over pay offer to government-backed fund that was ‘too high’

Kyodo

Economy minister Hiroshige Seko said Tuesday he will voluntarily return a month’s pay after his ministry offered annual remuneration of over ¥100 million to executives at a government-backed investment fund and later retracted it for being “too high.”

“We have caused an administrative blunder where we proposed an undetermined plan to the management of the (Japan Investment Corp.) and canceled it, triggering mutual distrust” between the ministry and the fund, Seko told a news conference.

Takashi Shimada, vice minister at the Ministry of Economy, Trade and Industry, will voluntarily return 30 percent of a month’s wages to take responsibility for insufficient supervision as the ministry’s top bureaucrat.

The ministry said Monday it will retract its proposal of annual remuneration of up to over ¥100 million made on Sept. 21 to four JIC executives, including for President and CEO Masaaki Tanaka, after judging that the amounts were higher than at other public-private funds.

“I had not been briefed on the amount of remuneration,” Seko said. “There is a sense of appropriate level that the public can accept. (The proposed amount) was too high.”

Following the decision to review the level of remuneration, the ministry notified Tanaka and held talks with him, including on Nov. 9 and Nov. 24, but the fund chief rejected the suggested changes, according to the ministry.

On Nov. 28, the fund applied to the ministry for approval of its budget plan for the fiscal year starting April, with the assumption that the amount of remuneration would be at the level initially proposed by the ministry. The ministry decided Monday not to approve it.

The fund said Monday that it responded in line with the ministry’s proposal in September and with relevant laws such as the Companies Act.

Executive remuneration has become a hot topic following the arrest of Carlos Ghosn, former chairman of Nissan Motor Co. and one of the highest-paid executives in the country, for allegedly understating his pay in securities reports presented to regulators.

The government holds nearly 100 percent of the shares in the Japan Investment Corp., which was launched in September to invest in ventures, replacing the government-backed Innovation Network Corp. of Japan fund.