2011.12.10

A Rotten Picture at Olympus

/Page 28-29, TIME December 12, 2011/

Introduction

We have sometimes found a big corporate scandal news in Japan. I do not think this is an unique phenomenon to Japan, but all country has such a false. But this example about Olympus’ crime reveals difference of nature of corporate crime between Japan and other countries. Few company in the world except Olympus can make through such a clever, organized, and long-running illegal activity. What make the famous company criminal is yakuza, a traditional criminal group in Japan, in some explanation, but, in my opinion, this scandal symbolizes the traditional corporate culture in Japan.   

Briefing

• What has happened to a world-famous company holding popular brands?

    Back to 1990s, Olympus suffered huge scale losses in stock and real estate transaction, like most of other companies did. Then its top executives tried to conceal the mistake by doing tricks on its account processing, which is ilegal and the very beginning of this scandal. 

• What relations are there in such a operation and the criminal group?

    There is no clear evidence, but provably yakuza helped, or maybe forced, the company to engage in illegal accounting. In return for that, the criminal group must have received some millions of yens, because the company’s payment on the account book is larger than its losses in the bubble period. 

• What is essential in this case, and what is it attributed to?

    Most remarkable thing in this case is that the scandal is published by the company’s foreign ex-CEO. That means this crime would be kept hidden without him, and shows how closed and how strictly controlled the company is. These features are unique to Japan, and, thus, they are attributed to a common corporate culture in Japan. 

Opinion

What is a common corporate culture in Japan? In some sociological analysis, that is royalty to the company, the wage system based on seniority, or earnest national character. But I think the answer for a question will make it clear. Who owns the company? Americans will answer that stockholders do, but Japanese will answer that employees do. In this context, ‘employees’ include administrative class like CEO. Whole these things show that separation of administration and possession is not clear, or maybe does not exist. In this environment, people are not payed for their ability to the job, but for ownership of the company. Such a character sometimes misguide decision makers to unreasonable and emotional conclusion. In the Olympus’ case, the CEO tried to hide the financial management mistake, because otherwise he would lose his ownership of vested interests as an administrator. The culture common with Japanese companies work badly in some case, and this is typical one of it.