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I was stunned by recent media reports that Takuhiko Tsuruta, president of the Nihon Keizai Shimbun newspaper, had become a whistle-blowing target. At a company shareholders meeting, a proposal demanding Tsuruta’s dismissal from the board was presented by an editor and shareholder of the newspaper. Tsuruta survived the motion.

Newspapers rarely report problems within the industry, but major dailies and affiliated weekly magazines reported the Tsuruta affair in a big way. According to the reports, Tsuruta was accused of mismanagement over a number of bills drawn by a Nikkei affiliate as well as a suspicious relationship with a lover.

Although relatively uncommon in the newspaper industry, whistle-blowing has become increasingly common in the business world. For example, scandals over Snow Brand Food Co.’s mislabeling of beef and Tokyo Electric Power Co.’s coverup of technical problems at its nuclear power plants came to light through whistle-blowing.

Behind the newspaper scandals is the secretiveness of the industry. Shares in newspaper companies are not publicly traded and are owned by a limited number of people, such as the founder, employees and news agents. Employee shareholders have little choice but to support management policies because if they dare criticize the management at a shareholders meeting, they could receive discriminatory treatment in personnel appointments.

As an editorial writer for a vernacular newspaper, I once wrote that generally Japanese corporations lack an effective system for checking the conduct of management. I was flabbergasted when my boss became agitated because of concern the piece could offend the newspaper’s president. There have been very few examples of the kind of action taken recently by the Nikkei editor.

Since they are seldom criticized, newspaper executives of Japan’s six major dailies with a circulation of more than 2 million tend to stay in their job for a long time. Tsuneo Watanabe, president of the Yomiuri Shimbun, is 76 years old; three are 75 or over; and the youngest is 65. Watanabe has remained in his job for 12 years, and the Nikkei’s Tsuruta has kept his post for 10 years. Both are known for wielding strong power over their companies. Tsuruta, who was named Nikkei chairman after the whistle-blowing incident, would not have been tainted by the scandal if he had quit earlier as president.

Japanese business executives are much older than their U.S. counterparts, and newspaper executives are even older. The nation’s top business leader, Federation of Economic Organizations chairman Hiroshi Okuda is 69. Major companies are appointing officials around 60 as president as part of their efforts to tide over the long economic slumps.

Gerontocracy is common at newspaper companies because they face little international competition due to the language barrier and enjoy restrictions on domestic competition as an exception under the Antimonopoly Law. In addition, it is difficult to penetrate the newspaper market because of the Japanese-style press club system. Furthermore, the industry has successfully blocked outside intervention under the guise of protecting freedom of speech. These problems have created a hotbed for corruption.

For example, in 1987, officials of the Akita Prefectural government misused part of its construction budget for refurbishing a golf course affiliated with the Akita Sakigake Shimpo newspaper. A former newspaper employee exposed the scandal in a book, forcing the chairman and the president to resign. Nineteen prefectural officials, including the governor, took pay cuts as part of their punishment.

In 1999, the son-in-law of the owner of the Shinnihonkai Shimbun newspaper continued writing bylined articles on politics even after announcing his candidacy for the Tottori gubernatorial election. The ruling Liberal Democratic Party and the Japan Newspaper Publishers and Editors Association had to intervene to have him stop the practice.

Since they often play a crucial public role, newspapers must have a system for strict self-control. To improve their corporate governance, an increasing number of Japanese companies have appointed executive officers and outside directors. Emulating the widespread move, some Japanese newspaper companies have appointed outside directors. More often than not, though, these officials are executives of affiliated companies.

To increase the transparency of their operations, newspaper companies should hire outside lawyers and academics as executives. Since their shares are not publicly traded, newspaper companies have no legal obligation to publish their financial statements, but they should do so of their own volition in their newspapers. I believe that newspaper companies should also appoint young executives to top editorial and marketing posts to revitalize themselves.

Privacy and human-rights protection bills that were presented to the Diet last year failed to pass, as the media claimed the bills could lead to restrictions on their activities. The bills were carried over to the next session. Mounting public criticism, meanwhile, has forced the media to curtail excessive reporting activities on individuals, and courts have ordered large amounts of punitive damages in defamation trials.

Newspapers have been trying to deal with the problem by creating special commissions of outside experts to review the contents of their papers, but have had only limited success in this effort. Newspapers, like television stations, should establish outside grievance panels. To maintain authority as the fourth estate, the newspaper industry should push reform efforts its own way.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
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