Analysis: Little appetite in Japan for major post-Olympus reform
By Linda Sieg and Yoko Kubota
TOKYO (Reuters) - Japan is unlikely to make sweeping reforms to rules on corporate governance in the wake of the Olympus Corp accounting scandal because of a largely hostile business lobby and a lack of political will to clip the wings of top executives.
The $1.7 billion scheme to hide two decades of investment losses at Olympus is one of Japan's worst accounting frauds and highlights long-standing criticism of lax corporate governance, yet analysts say only minor reform is likely.
They cite the opposition of business, a government weighed down by a mountain of voter-sensitive issues and a divided parliament, as well as an insular corporate culture that makes some wonder if tough new rules would prevent another Olympus anyway.
"I think Olympus does reflect many of the problems of corporate governance in Japan that people have been talking about for years," said Jamie Allen, secretary general of the Hong Kong-based Asian Corporate Governance Association, whose members include fund managers with assets of more than $10 trillion globally.
"Whilst not every company may be as bad as this, I certainly don't think Olympus is an isolated case in terms of its overall weak corporate governance system."
Critics have long called for more outside scrutiny of Japanese boards, traditionally dominated by executive directors, but the boldest legal reform suggested since the Olympus scandal -- a minimum of one outside director -- would not go much further than existing Tokyo Stock Exchange rules and would be weaker than standards in Britain and the United States.
But this would still be a step too far for Japan's main business lobby, Keidanren.
"I do not think there are any problems in terms of the (corporate governance) system," Yasuhisa Abe, director of Keidanren's business infrastructure bureau, told Reuters recently. "The issue is really about individual firms." Continued...