Ben McClannahan of the Financial Times and I talked for a while about the phenomenon and scapegoat Horie Takafumi.
Mr. McClannahan was kind enough to include a quote from out conversation in his article.
(Link)
Showing posts with label financial scandal. Show all posts
Showing posts with label financial scandal. Show all posts
Monday, May 19, 2014
Thursday, March 28, 2013
Horie Is Set Free And We Are Not
Internet entrepreneur turned target of prosecutors Horie Takafumi was released from prison yesterday after serving nearly three quarters of his sentence.
That Horie is now apologetic should not be read as his being accepting of his guilt. He is out on parole. He will, for as long as he is out on parole, keep quiet about the case brought against him.
We should not be surprised if Horie remains quiet about the actions of the judicial system even after his parole period ends. Horie fought hard against the law -- refusing to confess, even after his subordinates agreed to testify against him; asserting his innocence on all charges: appealing his guilty verdicts all the way to the Supreme Court.
Incarceration, however, brings a change in values. The primary one -- and it is particularly forgivable in those who never actually did anything wrong -- is the desire to never be incarcerated again. That Horie would never again want to be seen as challenging the status quo powers is understandable.
Rather than dwelling upon the injustice of his incarceration, Horie seems to have found a private liberty in serving as a caregiver to his fellow inmates. Whilst no substitute for real freedom, the right to care for others liberates the spirit, no matter the condition of the body. That Horie has expressed the desire that other inmates might enjoy the privilege of freedom he is enjoying indicates he has understood that behind the bars and the funny clothes, the imprisoned are human beings -- something he would have never known had himself not become one of them.
That Horie may no longer have the fire to fight for a more just judicial system does not let any of us off the hook. With recent reversals of false convictions and the of challenging of the Diet over the constitutionality of elections, it may seem that judges are waking up to their latent power to mete out justice, rather just impose penalties for supposed violations of the law. Unfortunately, none of the blatantly political cases of the 2000s -- the false accounting cases against Horie and his Livedoor subordinates, Murakami Yoshiaki's insider trading conviction (Link) and the cases against Ozawa Ichiro and his secretaries -- has been reversed on appeal (Ozawa managed to avoid all convictions in the cases brought against him by the controversial Committees for the Inquest of the Prosecution)
For all who dwell in this blessed land, doing anything, we must assume we are still at the mercy of the prosecutors, who need only to suddenly be told not to like us any more to go all Lavrenti Beria ("You bring me the man, I'll find you the crime.") on us.
The fight is not over.
Later - For a less morose take on events, see the Wall Street Journal's coverage of Horie's release. (Link)
Fallen tycoon Horie freed from jail(Link)
The Japan Times
by Reiji Yoshida and Kazuaki Nagata, Staff Writers
Takafumi Horie, former president of the Internet firm Livedoor Co. and an entrepreneurial hero for young generations, was paroled Wednesday after spending 21 months behind bars.
In a news conference Wednesday night, an apologetic Horie, who lost 30 kg while incarcerated, expressed his intention to contribute to society by helping ex-prisoners get back on their feet. He also said he wants to reunite with his space rocket project and launch a website to critique how news is reported.
Horie walked out of a prison in Nagano Prefecture at around 7:40 a.m. He soon appeared live in video streamed by Nico Nico Douga, Japan’s leading online video service operator, while he was in a car headed for Tokyo to hold a news conference.
"I thank everybody who took care of me while in prison. Thank you very much. I received parole after serving 74 percent of my prison term," Horie said on Twitter.
In his later press conference, he said, "I caused trouble to many people in society and (Livedoor) shareholders over the Livedoor case and am deeply sorry."
That Horie is now apologetic should not be read as his being accepting of his guilt. He is out on parole. He will, for as long as he is out on parole, keep quiet about the case brought against him.
We should not be surprised if Horie remains quiet about the actions of the judicial system even after his parole period ends. Horie fought hard against the law -- refusing to confess, even after his subordinates agreed to testify against him; asserting his innocence on all charges: appealing his guilty verdicts all the way to the Supreme Court.
Incarceration, however, brings a change in values. The primary one -- and it is particularly forgivable in those who never actually did anything wrong -- is the desire to never be incarcerated again. That Horie would never again want to be seen as challenging the status quo powers is understandable.
Rather than dwelling upon the injustice of his incarceration, Horie seems to have found a private liberty in serving as a caregiver to his fellow inmates. Whilst no substitute for real freedom, the right to care for others liberates the spirit, no matter the condition of the body. That Horie has expressed the desire that other inmates might enjoy the privilege of freedom he is enjoying indicates he has understood that behind the bars and the funny clothes, the imprisoned are human beings -- something he would have never known had himself not become one of them.
That Horie may no longer have the fire to fight for a more just judicial system does not let any of us off the hook. With recent reversals of false convictions and the of challenging of the Diet over the constitutionality of elections, it may seem that judges are waking up to their latent power to mete out justice, rather just impose penalties for supposed violations of the law. Unfortunately, none of the blatantly political cases of the 2000s -- the false accounting cases against Horie and his Livedoor subordinates, Murakami Yoshiaki's insider trading conviction (Link) and the cases against Ozawa Ichiro and his secretaries -- has been reversed on appeal (Ozawa managed to avoid all convictions in the cases brought against him by the controversial Committees for the Inquest of the Prosecution)
For all who dwell in this blessed land, doing anything, we must assume we are still at the mercy of the prosecutors, who need only to suddenly be told not to like us any more to go all Lavrenti Beria ("You bring me the man, I'll find you the crime.") on us.
The fight is not over.
Later - For a less morose take on events, see the Wall Street Journal's coverage of Horie's release. (Link)
Wednesday, September 05, 2012
Re Dr. Nakano's Sadness
Nakano Ko'ichi is a rarity in Japanese academia: a scholar with a brilliant command of the literature of his field, a disarmingly frank and reassuring manner, an ability to examine Japan's contemporary problems in the context of broader flows of world history and fluency both in his mother tongue and English.
And a man, without shading or hedging, of the Left.
He has published a stark and lucid essay on a potential harsh turn in Japan's economic and foreign policy at CNN's Global Public Square:
"Japan: Get ready for a rightward shift"
As is known, I reject the thesis that the "ditching most of its main campaign manifesto pledges and letting the country’s bureaucrats redefine the policy agenda" was the primary reason for the collapse in the popularity of the Democratic Party of Japan as reflected in public opinion polling. Instead, I lay most of the blame at the feet of Ozawa Ichiro and his inability to accept or understand the concept of "party over person" as inextricable to the process of running a party government. Collaboration with the bureaucrats on policy was forced upon the DPJ by the need to fight against the Liberal Democratic Party and its 50 year legacy of misrule. Ozawa Ichiro tried to fight both the LDP and the bureaucrats at once, with the inevitable result of allowing both to make up the huge losses of power and legitimacy they suffered in the elections of 2009.
The DPJ's current leadership had been much, much smarter in dealing with bureaucrats, ceding on some matters of policy, while inflicting deep cuts in salaries and recruitment.
These serious woundings of the bureaucracy have been insufficiently publicized because the DPJ still needs the bureaucrats in their corner. "Look at how we have roughed up the bureaucrats!" is hardly the message you want to be shouting unless you want the bureaucrats to undermine your every move.
As for Dr. Nakano's take on the relations between nationalism, deregulation and unraveling of the social fabric, I am still not convinced of the direct responsibility of government policy in a worsening of social inequality and social disfunction, or, conversely, the capacity of government to remedy the situation.
Take, for example, Dr. Nakano's citation of Japan's stunning suicide rate (which, if you consider it the murder of oneself, makes Japan one of the most dangerous places to live on Earth). The number of suicides soared in 1998, the year the financial system finally lost government support, leading to the spectacular failures of banks and Yamaichi Securities. The levels have stayed high ever since.
It is that "ever since" that has me skeptical. Certainly if unsteadiness of the economy was the trigger for rises in the suicide rate, improvements in the economy should lead to lower levels of suicide -- especially since the post-2008 rise has been almost entirely due to increases in suicides of men, women committing suicide at the same basically the same rate over the last 35 years.
Something else is going on...and the lead probably needs to be taken by non-profit organizations rather than the government.
As for income equality, I have greater faith in the ingenuity of the people of this blessed land than either Nakano or Finance Ministry bureaucrats seem willing to admit. In the absence of a tax registration number system -- the likelihood of the death of a bill establishing such a system, there is still a great deal of leeway for transfers of wealth across the generations, with the asset-rich older generations supplementing the income of their children and grandchildren, with the government's draconian estate taxes as all the incentive older citizens will ever need to hand down their wealth to their descendants.
I also think that international statistics on levels of Japanese poverty vastly underestimate the differences in price levels in between the urban and rural areas, skewing the estimates of rural poverty higher than actual purchasing power should reflect. I may be wrong on this point, however.
As for Hashimoto Toru's programs, Abe Shinzo's programs and Prime Minister Noda Yoshihiko's programs, lumping them together under the rubric of the exploitation of nationalism, you insults Noda's and Hashimoto's intelligence...and ascribes to Abe an intelligence he simply does not possess. As for the accusation that Prime Minister Noda is contributing to the escalation of territorial disputes with Japan's neighbors, that is simply untrue. He made a fairly admirable effot to calm the waters -- sending the Hong Kong activists home without charging them with anything, forbidding the landing of Ishihara Shintaro's land survey team upon the Senkakus -- while reiterating what are the existing policy positions of the government of Japan.
And a man, without shading or hedging, of the Left.
He has published a stark and lucid essay on a potential harsh turn in Japan's economic and foreign policy at CNN's Global Public Square:
"Japan: Get ready for a rightward shift"
As is known, I reject the thesis that the "ditching most of its main campaign manifesto pledges and letting the country’s bureaucrats redefine the policy agenda" was the primary reason for the collapse in the popularity of the Democratic Party of Japan as reflected in public opinion polling. Instead, I lay most of the blame at the feet of Ozawa Ichiro and his inability to accept or understand the concept of "party over person" as inextricable to the process of running a party government. Collaboration with the bureaucrats on policy was forced upon the DPJ by the need to fight against the Liberal Democratic Party and its 50 year legacy of misrule. Ozawa Ichiro tried to fight both the LDP and the bureaucrats at once, with the inevitable result of allowing both to make up the huge losses of power and legitimacy they suffered in the elections of 2009.
The DPJ's current leadership had been much, much smarter in dealing with bureaucrats, ceding on some matters of policy, while inflicting deep cuts in salaries and recruitment.
These serious woundings of the bureaucracy have been insufficiently publicized because the DPJ still needs the bureaucrats in their corner. "Look at how we have roughed up the bureaucrats!" is hardly the message you want to be shouting unless you want the bureaucrats to undermine your every move.
As for Dr. Nakano's take on the relations between nationalism, deregulation and unraveling of the social fabric, I am still not convinced of the direct responsibility of government policy in a worsening of social inequality and social disfunction, or, conversely, the capacity of government to remedy the situation.
Take, for example, Dr. Nakano's citation of Japan's stunning suicide rate (which, if you consider it the murder of oneself, makes Japan one of the most dangerous places to live on Earth). The number of suicides soared in 1998, the year the financial system finally lost government support, leading to the spectacular failures of banks and Yamaichi Securities. The levels have stayed high ever since.
It is that "ever since" that has me skeptical. Certainly if unsteadiness of the economy was the trigger for rises in the suicide rate, improvements in the economy should lead to lower levels of suicide -- especially since the post-2008 rise has been almost entirely due to increases in suicides of men, women committing suicide at the same basically the same rate over the last 35 years.
Something else is going on...and the lead probably needs to be taken by non-profit organizations rather than the government.
As for income equality, I have greater faith in the ingenuity of the people of this blessed land than either Nakano or Finance Ministry bureaucrats seem willing to admit. In the absence of a tax registration number system -- the likelihood of the death of a bill establishing such a system, there is still a great deal of leeway for transfers of wealth across the generations, with the asset-rich older generations supplementing the income of their children and grandchildren, with the government's draconian estate taxes as all the incentive older citizens will ever need to hand down their wealth to their descendants.
I also think that international statistics on levels of Japanese poverty vastly underestimate the differences in price levels in between the urban and rural areas, skewing the estimates of rural poverty higher than actual purchasing power should reflect. I may be wrong on this point, however.
As for Hashimoto Toru's programs, Abe Shinzo's programs and Prime Minister Noda Yoshihiko's programs, lumping them together under the rubric of the exploitation of nationalism, you insults Noda's and Hashimoto's intelligence...and ascribes to Abe an intelligence he simply does not possess. As for the accusation that Prime Minister Noda is contributing to the escalation of territorial disputes with Japan's neighbors, that is simply untrue. He made a fairly admirable effot to calm the waters -- sending the Hong Kong activists home without charging them with anything, forbidding the landing of Ishihara Shintaro's land survey team upon the Senkakus -- while reiterating what are the existing policy positions of the government of Japan.
Wednesday, March 28, 2012
Words Are Not Enough
Hmmmm...
As for the other executives called to testify, including Old Boy advisor from the old Social Insurance Agency, when they claimed that if they had to choose between calling themselves victims (higaisha) and perpetrators (kagaisha), they would call themselves victims -- that was rich.
Prior to yesterday's performance, I was thinking, "For their sakes, Asakawa and his cronies had better hope beyond hope that none of the small- and medium-sized companies they bilked has ties to organized crime." After last night's performances, I found myself thinking, "For their sakes, they had better hope beyond hope that none of the 880,000 investors whose savings they destroyed watches television."
Japan's AIJ chief admits loss cover-up, apologizesI was watching snippets from the hearing yesterday on NHK -- and I would not characterize the attitude of Mr. Asakawa as apologetic. Oh, he may have mouthed phrases that when translated by a machine would scroll out as apologies. His attitude, however, said, "Yeah, I lost your money. But then you were stupid enough to give it to me. Who is the jackass here?"
Reuters
The president of Tokyo-based money manager AIJ Investment Advisors admitted to Japanese lawmakers on Tuesday to covering up losses of $1.3 billion in clients' pension money, but said he had no intention of cheating his clients.
In his first public comment since the scandal broke in February, Kazuhiko Asakawa apologized to clients and the financial industry for the cover-up and said he had been confident that the losses could be recovered.
AIJ lost the funds through bad bets on equity and bond derivatives, wiping out the bulk of the $2.4 billion in client assets it was managing, Japan's financial regulator, the Financial Services Agency (FSA), said last week.
More than 90 corporate pension funds, mostly smaller ones, were invested with the money manager, which was handling pensions for about 880,000 people.
"I want to use this opportunity to apologize to all beneficiaries who believed in our funds and purchased them," Asakawa told a financial committee of parliament...
[Link]
As for the other executives called to testify, including Old Boy advisor from the old Social Insurance Agency, when they claimed that if they had to choose between calling themselves victims (higaisha) and perpetrators (kagaisha), they would call themselves victims -- that was rich.
Prior to yesterday's performance, I was thinking, "For their sakes, Asakawa and his cronies had better hope beyond hope that none of the small- and medium-sized companies they bilked has ties to organized crime." After last night's performances, I found myself thinking, "For their sakes, they had better hope beyond hope that none of the 880,000 investors whose savings they destroyed watches television."
Saturday, February 25, 2012
AIJ Is Not A Lousy Investment Company...
...it is a truly excellent Ponzi scheme. (E)
The Bernard Madoff scandal barely made the news here in Japan. So it is not surprising that an investment company reporting steady returns for over a decade, even as the globe was rocked by the greatest financial meltdown since the Great Depression, was not flagged by regulators or corporate pension fund managers as suspect. Now, according to The Asahi Shimbun, many of the 120 corporate pension funds that invested in AIJ are on line to writing off half of their asset base, meaning they will not be paying out their corporate retirement benefits (kigyo nenkin) or even the full amount of their employees pension (kosei nenkin). (J)
Greed makes simpletons of us all. If something sounds too good to be true, it probably isn't. A fool and his money are soon parted.
Yes, the clichéd admonitions could just go on and on.
The Bernard Madoff scandal barely made the news here in Japan. So it is not surprising that an investment company reporting steady returns for over a decade, even as the globe was rocked by the greatest financial meltdown since the Great Depression, was not flagged by regulators or corporate pension fund managers as suspect. Now, according to The Asahi Shimbun, many of the 120 corporate pension funds that invested in AIJ are on line to writing off half of their asset base, meaning they will not be paying out their corporate retirement benefits (kigyo nenkin) or even the full amount of their employees pension (kosei nenkin). (J)
Greed makes simpletons of us all. If something sounds too good to be true, it probably isn't. A fool and his money are soon parted.
Yes, the clichéd admonitions could just go on and on.
Sunday, October 30, 2011
What's The Reason For The Difference in Coverage?
I am trying to get a handle on why the non-economic news media complex is fascinated with the Daio Paper scandal while remaining virtually silent on the much, much larger Olympus scandal. Every night we are treated to breathless updates featuring snippets of the handsome, young former chairman of Daio, mostly walking down the steps of his home. Not that there is much to the story: little rich boy takes over Daddy's company, uses its cash reserves as his own personal piggy bank, blows the money in Las Vegas and other venues, finds that his own personal fortune cannot pay back even half the loan from the company's kitty. Even the Japanese press does not make any bones about this being a story of a company where the founding family treated the company as its own private possession, with their underlings obliging them (en).
By contrast, the Olympus story is rife with "you cannot make this stuff up" international skullduggery: a foreign president brought in to clean up the company uncovers a mega-sized scandal and is summarily sacked for doing his job properly; record advisory fees paid to a Cayman islands company that has since evaporated, acquisitions whose value Olympus had to write off in a year; a pair of mysterious banker brothers -- it is all just incredible (en - with a special double hurrah for Hiroko Tabuchi).
Yet in the mainline press and on television, nada. Just a rote announcement that the chairman who sacked the foreign CEO himself resigned on Wednesday due to "confusion over acquisitions" made by Olympus.
The scale of the robbery of Olympus is50 times 5 times the size of the Daio Paper scandal.
What gives?
By contrast, the Olympus story is rife with "you cannot make this stuff up" international skullduggery: a foreign president brought in to clean up the company uncovers a mega-sized scandal and is summarily sacked for doing his job properly; record advisory fees paid to a Cayman islands company that has since evaporated, acquisitions whose value Olympus had to write off in a year; a pair of mysterious banker brothers -- it is all just incredible (en - with a special double hurrah for Hiroko Tabuchi).
Yet in the mainline press and on television, nada. Just a rote announcement that the chairman who sacked the foreign CEO himself resigned on Wednesday due to "confusion over acquisitions" made by Olympus.
The scale of the robbery of Olympus is
What gives?
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