9 Execs of Japan Govt-Linked Fund Offer Resignations

Japan Investment Corp. President Masaaki Tanaka said Monday that all of the investment fund's nine board members from the private-sector will resign, including himself. They offered to quit due to differences over their executive pay and investment policies with the industry ministry, which supervises the public-private investment fund. "Due to a change in the ministry's stance on the investment fund, it became difficult for us to achieve our mission," Tanaka told a press conference. The fund has fallen into a crisis in less than three months after it was set up in September in a bid to create new industries that would contribute to economic growth, sources familiar with the situation said. Tanaka criticized senior Japanese government officials for destroying compensation contracts for the board members and ignoring decisions made at board meetings. "These events show that Japan is not a nation ruled by law," Tanaka said. He also said that the board members decided to resign because the industry ministry had called on JIC to change to a public investment fund reflecting opinions of the government. Those stepping down with Tanaka include Masahiro Sakane, chairman of JIC's executive board, Yasunori Kaneko, the fund's deputy president, and executive managing directors Hideaki Tsukuda and Hiroaki Toya. All of the departing members of the board will leave after finishing their remaining work. One board member from the industry ministry and another from the Finance Ministry will stay on. The fund is highly likely to have difficulty finding successors to outgoing board members who are financial professionals, industry sources said. Meanwhile, industry minister Hiroshige Seko told a separate press conference that the ministry's withdrawal of the remuneration plan for the board members was an administrative "blunder" and offered an apology for the confusion. Seko said that his ministry will boost efforts to secure stability in administering existing investment projects and select new board members as soon as possible. For Tanaka, who hails from a major Japanese banking group, and other top JIC executives, the ministry initially offered a fixed salary of about 15 million yen and short-term performance-linked compensation of up to 40 million yen annually. The ministry withdrew the plan in November, however, in the face of criticism from within the government including the prime minister's office that the compensation was too high. Furthermore, the ministry requested stronger government control over individual investment matters handled by the fund. The establishment of JIC was initially expected to help promote investment in growth sectors, such as robotics and drug development, and eventually help to strengthen the competitiveness of the Japanese economy.