Ministry panel launches governance review of Japan Investment Corp. as whole board set to quit

JIJI, Kyodo

An industry ministry panel on Tuesday launched a review of the governance and remuneration systems at the government-affiliated Japan Investment Corp., as the entire JIC board prepares to quit over increased ministry oversight.

The industry ministry, under Hiroshige Seko, appointed Hitotsubashi University professor Kunio Ito to head the panel.

The ministry hopes to tentatively pick new board members by the end of March based on a report from the panel, officials said.

Ito, who is well versed in corporate governance-related issues, has served as head of an industry ministry task force of experts on reforming Tokyo Electric Power Company Holdings Inc., whose tsunami-stricken Fukushima No. 1 nuclear plant suffered a triple meltdown in March 2011.

JIC, which currently aims to maximize its profits by providing funds to investment firms both at home and abroad, may shift its focus to investment in individual companies that are seen playing important roles in the government’s industry promotion strategy, according to the sources.

All nine JIC board members hailing from the private sector are set to resign on Friday in protest over the ministry’s increased involvement in the investment fund.

When it was established in September through the reorganization of Innovation Network Corp. of Japan, the ministry proposed paying up to ¥55 million in annual remuneration per board member, including compensation linked to short-term involvement.

But the ministry withdrew the proposal in the face of a chorus of criticism from government officials that the pay level was too high.

The ministry then cut the maximum salary by 40 percent and demanded stronger control over investment matters handled by the fund.

JIC President Masaaki Tanaka and eight other board members from the private sector announced on Dec. 10 their decisions to resign, claiming that the ministry’s moves will make the fund’s operations and human resources procurement difficult.