Resort and railroad kingpin Yoshiaki Tsutsumi pleaded guilty to charges of insider trading and falsifying records yesterday at the opening...
TOKYO — Resort and railroad kingpin Yoshiaki Tsutsumi pleaded guilty to charges of insider trading and falsifying records yesterday at the opening of his trial, widely seen as a symbol of the growing pressures toward transparency and social responsibility in corporate Japan.
Once ranked the world’s richest man by Forbes magazine, Tsutsumi, formerly head of Seibu Railway and the Japanese Olympic committee, has taken a fall that is riveting Japan.
His high-profile trial in Tokyo District Court also highlights the gradual shift away from old-style insular management as Japan increasingly globalizes and attracts foreign investment. Japanese companies have long been characterized by an old-boys network that brushed off investors and consumers.
“The Seibu case is finally bringing to light the long-standing relations between shareholders and the company that defied modern standards,” said Masayuki Deguchi, who heads the International Society for Third Sector Research, a Baltimore group that promotes research in philanthropy. “But such Japanese ways are no longer going to be tolerated in the world.”
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Tsutsumi, 71, entered the courthouse somberly. A court official confirmed Tsutsumi pleaded guilty.
He apologized and acknowledged he had hurt shareholders, the quasipublic NHK TV reported.
“There is no mistake” to the charges, he was quoted as saying.
The trial will continue, as prosecutors are required to present all their evidence and then the judge will decide a sentence.
Since World War II, Tsutsumi developed a reputation for ruling over his empire of hotels, ski resorts, golf courses and professional baseball team, the Seibu Lions, with an iron hand. Media reports likened him to a godlike figure.
In an apparent show of corporate loyalty, a team of two Seibu employees was assigned until last year to take turns every night staying at the sprawling grave site of Tsutsumi’s father near Tokyo and ring a giant bell at 6 a.m.
Earlier this year, the former president of Seibu Railway, one of the executives questioned in the criminal investigation, hanged himself at home, apparently to avoid squealing on his boss. Last year, another executive committed suicide amid a related investigation by Japan’s financial watchdog.
Tsutsumi also won respect as a charismatic billionaire with tremendous influence in Japan’s political circles and sports. A good skier, he is credited with being instrumental in winning the 1998 Nagano Winter Olympics. Skeptics said his hotels and ski slopes were the big beneficiaries of public projects such as railways and roads that accompanied the Games.
But since his arrest in March, the media have portrayed him as a disgraced figure of the past, whose rise to glory was based on methods no longer relevant to rapidly globalizing Japan.
At the opening of the trial, prosecutors said Tsutsumi conspired with several executives to falsify Seibu Railway’s 2003 financial statement, putting the stake of Kokudo, his privately owned company, in the railway far lower than actual numbers, according to the prosecutors’ office.
Having a handful of top executives owning too much was a violation of Tokyo Stock Exchange rules. Seibu acknowledged the deception, and the stock exchange delisted the company in December.
Prosecutors said Tsutsumi feared the consequences of getting delisted and wanted to sell the Seibu stocks last year but didn’t want to take losses because their price was low.
If convicted, Tsutsumi faces up to five years in prison and a fine of up to 5 million yen ($46,000) for falsifying financial statements, or up to three years in prison and a fine of up to 3 million yen ($27,000) for insider trading.
Tsutsumi was given the title of world’s richest man by Forbes magazine in the late 1980s. Crashing land prices in the early 1990s toppled him from that rank, but he is estimated to still be worth $3 billion.