• JIJI, Kyodo

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The pace of business expansion and a closed corporate culture at Leopalace21 Corp. resulted in defects in the apartment buildings constructed by the company, a third-party investigative panel has said in its final report.

In the report, the panel said that Leopalace21 “was quick to successively develop and deploy new models to recover and expand its business performance and neglected to verify” its compliance with laws and regulations, such as the Building Standards Law, and the quality of the completed buildings.

Law firm Nishimura & Asahi was appointed by the company’s board in February to form the investigative panel and probe the construction issues.

The report, announced by Leopalace21 on Wednesday, noted that faulty construction had been conducted throughout the company, and that its closed corporate culture had led to the improper practices.

Its employees had found it difficult to voice their opinions to their bosses under the strong leadership of the company’s founder, Yusuke Miyama, who led the company from 1973 to 2006, the report said.

In management changes announced the same day, Leopalace21 said seven of its eight board members would quit while three outside directors would remain, subject to approval at a general shareholders’ meeting on June 27.

The new board will have 10 members rather than the current 11, but will increase the number of external directors from the current three to five.

Eisei Miyama stepped down as president and CEO on Thursday, as had already been planned before the management overhaul, though he will remain a board member until the new management team is approved. He was succeeded by Managing Executive Officer Bunya Miyao.

The report issued Wednesday did not mention whether Miyama, who had announced his resignation decision on May 10, played a role in the misconduct. Eisei Miyama is the nephew of founder Yusuke Miyama.

As a measure to prevent similar practices from occurring again, the panel suggested that Leopalace21 reform its corporate culture through in-house training programs. It specifically urged the firm to eliminate workplace harassment.

The Tokyo-based property company has been working on repairs to faulty apartments it built across the county over a period of more than a decade using improper materials. More than 14,000 residents will need to temporarily move out.

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