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Shareholders to sue Tepco executives for $67 billion
Mon, Mar 05 17:45 PM EST
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By Yoko Kubota
TOKYO (Reuters) - Shareholders of Tokyo Electric Power Co Inc, operator of the crippled Fukushima nuclear plant in northeast Japan, are suing the utility's executives for a record 5.5 trillion yen ($67.4 billion) in compensation, lawyers said.
The Fukushima Daiichi plant was wrecked by a quake and tsunami last March, triggering the world's worst nuclear crisis in a quarter of a century and swamping the firm with huge clean-up, compensation and decommissioning costs.
In the biggest claim of its kind in Japan, 42 shareholders filed a lawsuit in the Tokyo District Court on Monday accusing 27 current and former Tepco directors of ignoring multiple warnings of a possible tsunami and of failing to prepare for a severe accident, lawyers for the shareholders said in a statement.
They want the executives to pay damages to Tepco, which would then use the money to compensate those affected by the disaster.
There is deep public anger over Tepco's handling of the crisis and the perceived arrogance of top management, including underplaying the seriousness of the disaster in its early stages and delays in compensating those forced to leave their homes. Government officials have walked a tightrope between that taxpayer anger and keeping afloat a firm that provides electricity to 45 million people in Japan.
Japan's trade minister last month approved nearly $9 billion in additional support for Tepco to help compensate victims of the crisis, but said the government would not go ahead with a plan to inject more money into the utility unless it had more say in its management.
"By seeking to hold individuals responsible, we want to correct the collective and systemic irresponsibility in the nuclear industry," Hiroyuki Kawai, one of the lawyers, told a news conference.
Kawai said the record compensation was based on calculations by a government-appointed experts' panel of what Tepco might have to pay to victims and businesses. The company has forecast an annual net loss of 695 billion yen.
Tepco spokesman Taichi Okazaki said the company did not comment on matters related to lawsuits.
SENDING A MESSAGE
Japanese courts have previously required individual executives to compensate their companies for mismanagement, but the damages sought have never been on this scale.
Kawai believes the shareholders can win their case, but accepts it's unlikely the executives can pay such an amount. One of their main aims is to make directors of other utilities realize they could be held financially responsible in any future nuclear incident, he said.
"Whether we can win in terms of the court decision and whether we can collect compensation are two separate issues," Kawai told Reuters by telephone.
"This could be very effective in halting reactor restarts ... Directors of other utilities may have a sense of crisis that they could lose their own homes if they carelessly restart reactors and see another accident."
Only two of Japan's 54 nuclear reactors are currently operating, and by May there may be none, as heightened safety concerns among the public have prevented any re-starts, even after checks.
Some previous shareholder lawsuits have hit executives hard.
In 2008, five Janome Sewing Machine executives were ordered by the Tokyo High Court to pay the company 58 billion yen ($711 million) in compensation, local media reported.
And in 1995, former executives at what was then an independent Daiwa Bank were sued by shareholders for $1.45 billion over mismanagement. Six years later, the executives agreed to pay $2 million to the bank in an out-of-court settlement, a fraction of the $775 million the Osaka District Court had ordered them to pay.
Camera and medical equipment maker Olympus Corp has bowed to shareholder pressure and sued 19 current and former executives for up to $50 million in compensation over a $1.7 billion accounting fraud.
($1 = 81.5500 Japanese yen)
(Reporting by Yoko Kubota; Editing by Chris Lewis and Ian Geoghegan)\====
Insight: Japan missed tsunami wake-up call for change
Tue, Mar 06 23:05 PM EST
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By Tomasz Janowski and Linda Sieg
TOKYO (Reuters) - Three months after Japan's March 11 triple disaster, a long-time expert on the country arrived in Tokyo to research a book he intended to entitle "Rebirth of a Nation."
Months later, Richard Samuels is calling his work "The Rhetoric of Crisis."
A year after the huge earthquake, deadly tsunami and the world's worst nuclear disaster in a quarter century jolted the country, it is clear that even a shock of such magnitude failed to snap it out of its economic and political torpor.
A state of mental or physical inactivity or insensibility.
Lethargy; apathy.
"So far it seems there was more talk of change than change itself. It is all still being sorted out," said Samuels, director of the Center for International Studies at Massachusetts Institute of Technology.
Japan's mammoth government debt keeps piling up while critical decisions get pushed back, referred to various panels, lodged in elaborate rituals of "consensus-building" or political horse-trading in a gridlocked parliament.
Mainstream political parties, torn by conflicting group loyalties, proved incapable of setting aside their differences and providing the leadership for which the public longs.
Instead, politicians reverted to business as usual: parliamentary trench warfare and the annual "ditch the prime minister" exercise that gave Japan its sixth leader in five years and now threatens to block vital tax and welfare reforms.
"I personally expected a kind of coalition government just after the earthquake to rescue the economy," says Takahide Kiuchi, chief economist at Nomura Securities. "It never happened and the opposition and the ruling party are still fighting each other. This is my biggest disappointment."
That said, Japan has changed over those past 12 months -- though in ways too gradual and unspectacular to grab headlines.
The main driving force: growing distrust of politicians and bureaucrats and public indignation at their incompetence.
"I think it's all moved Japan on its axis slightly more than before. It has definitely made people less forgiving or believing in Japan Inc, the system," said Pelham Smithers, managing director of a London-based market research firm, who has visited Japan several times since March 11.
What remains unclear is whether the anger will force a radical overhaul of Japan's politics, economy and society or deepen public apathy and frustration -- or somewhere in between.
So far, there are few signs that Japan's elites will be pushed to implement fundamental change any time soon. The optimistic scenario is that Japan will continue its quiet, slow transformation of the past two decades toward greater accountability of elected officials and its powerful bureaucracy.
The most palpable changes are the repercussions of reactor meltdowns at the tsunami-crippled Fukushima power plant.
BECQUERELS AND GEIGERS
Not only has ex-premier Naoto Kan, at the helm when the disasters struck, been transformed into a renewable energy apostle, but the whole nation is undergoing a radical rethink.
Becquerels and sieverts are part of everyday vocabulary, Geiger counters are household items in parts of the country, saving electricity has become a year-round activity and the myth of clean and safe nuclear energy is dead.
"After March 11, I realized that I have lived before without thinking anything about nuclear power," said Kyoko Itagaki, 30, a designer taking part in an anti-nuclear rally in Tokyo last month.
"Now, the more I look into that, the more I realize how dangerous nuclear power plants are ... It's a sin not to care," she added. "My life has changed a lot. I now buy water and vegetables from certain places and have a Geiger counter."
Prime Minister Yoshihiko Noda has admitted that the government, bureaucracy, utilities and experts share the blame for being blinded by the myth of nuclear safety.
Power utilities and the government are now paying the price, so far unable to persuade a single community to approve restarts of reactors taken off line since the disaster, meaning all of Japan's 54 reactors may be shut by summer.
The government is trying to win back the trust of those communities, many of which have relied on nuclear plant-related income, by launching computer simulated "stress tests" and creating more independent oversight of the industry.
Noda, while not as blunt as his predecessor Kan, also admits that Japan will have to cut its dependence on nuclear power, though the government is likely to settle for a long gradual process when it formulates a new energy policy this summer.
Fukushima operator Tokyo Electric Power (Tepco) and other regional monopoly utilities that for decades enjoyed a symbiotic relationship with industry and politicians are beginning to feel the heat from the public and big customers.
"I think it is clear that this has been a trigger for the start of possible reform of that dark side of the system," says Tatsuo Hatta, an economist, who is on an expert panel discussing Japan's energy mix. "The myth that nuclear power was completely safe and that what utilities said was completely correct has been utterly destroyed."
Tepco's plan to hike electricity tariffs provoked an unprecedented attack from Japanese carmakers and steelmakers and several local municipalities have been trying to break its regional monopoly seeking competitive bids from its rivals.
Clearly, disillusion with Japan's establishment has reached new depths since the disasters.
When the Democratic Party of Japan swept to power in 2009, ending more than half a century of nearly uninterrupted rule by its conservative rival, the Liberal Democrats, it did so largely by promising to pay more heed to ordinary people while prying power from the bureaucracy and vested interests.
But the Fukushima disaster showed how the collusion between regulators, the bureaucracy and utilities persisted, giving the public a sense that it was let down by the entire system.
Opinion polls underscore the lack of voter trust in mainstream parties, which are showing visible alarm over a potential challenge from a 42-year-old mayor of the western city of Osaka, who advocates strong executive power.
On the flip side of sagging trust in officialdom, however, are signs that individuals and businesses are taking the initiative instead of relying on paternalistic bureaucrats.
For example, Aeon Co. , Japan's top supermarket chain has responded to public radiation fears with tougher standards than the official norms. In November, it took a step further and said it would not sell any food items that contained radiation.
"Consumers are demanding, so by having demanding standards I believe we are protecting producers," said Yasuhide Chikazawa, the chain's executive in charge of food safety.
Many private corporations responded quickly to the tsunami and have since collected donations and mobilized volunteers to help devastated communities.
NEW CHANNELS
The perceived lack of timely and full information about radiation risks from officials and mainstream media has also given rise to an array of social media initiatives.
"Critical new media have highlighted the shortcomings in the mass media's reporting on the Fukushima Daiichi nuclear crisis and attempted to fill the significant information gap they left," said Nicola Liscutin, a visiting research fellow at University of Tokyo.
One example is Web Iwakami, a service run by freelance journalist Yasumi Iwakami, who uses as many as 93 live streaming channels to report on anti-nuclear events across the country, alerting his 80,000 Twitter followers to the broadcasts.
That may not seem much in a country of 127 million, but for Japan, where protests used to attract only hard-core activists, the reach and scope add a new dimension.
"The nation-wide spread of these protests and their demographics are remarkable: from seasoned demonstrators to the many who confessed that this was their very first protest action; from families bringing their toddlers and children, to teenagers, students ...and pensioners," Liscutin said.
Matsumoto Hajime, 37, one of the organizers of major anti-nuclear rallies, says the Japanese have rediscovered politics.
"Japan has become more normal. Many young people started talking about government policies that directly affect them -- previously that was almost completely unheard of," he said in his recycling shop full of old furniture, radios and clocks in Tokyo's central Koenji neighborhood.
Yet even hard-core activists worry protests may have peaked.
They hope the protests have sown the seeds of a lasting transformation that will help Japan break out of its doldrums, but fear the energy will fizzle and the public become resigned.
Akiko Murakami, a mother of two schoolboys and one of the founding members of a grass-roots parent group in Fukushima dealing with radiation risks, may have best summed up those hopes and fears.
"Japanese are very good at forgetting and forgiving, which can be good in some ways, but in a situation like this, I think we should not forget and learn to think and act for ourselves, don't leave everything to the government," she said.
(With reporting by Antoni Slodkowski, Yoko Kubota and James Topham; Editing by Ron Popeski)
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