Fujitsu ex-boss seeks ¥5 billion

Denies ties to mob, readies lawsuit over 'forced' resignation

Compiled from Kyodo, Bloomberg

Former Fujitsu Ltd. President Kuniaki Nozoe said Wednesday he plans to file a ¥5 billion damages suit against two of the company's executives, claiming the firm sustained losses to that amount by forcing him to resign his position

The losses were incurred because negotiations Nozoe had led for the proposed sale of a Fujitsu subsidiary were suspended due to his "resignation," he said in Tokyo.

Nozoe urged the company to set up a third party committee to investigate the reasons some executives forced him out as president last year.

"It was an unusual situation where a company chief was (effectively) dismissed for a false reason," he said. "I really want to know the reason why such a situation emerged".

The move escalates a dispute that started last month, when the former executive at Japan's biggest computer-services company asked Fujitsu to nullify his September resignation and reinstate him. The public spat reflects a breakdown of corporate governance, said Yoshihiro Ito, senior strategist at Okasan Asset Management Co.

"Given what a huge corporation this is, it shakes people's trust in the company," Ito said. "If Fujitsu can continue to turn in better results, they'll be able to win back investor trust".

Fujitsu said March 6 it asked Nozoe to resign because he had links to a company with an "unfavorable" reputation, more than five months after saying he quit for health reasons.

Nozoe, 62, denies having ties to "antisocial forces," or organized crime, his lawyer, Kei Hata, said last month.

Nozoe planned to seek several hundred million yen in compensation, a newspaper reported earlier Wednesday, citing an unidentified source familiar with the plan. Fujitsu has no knowledge of such a claim, said Yasuhiko Yodo, a company spokesman.

"Whatever happens next in court doesn't mean much to investors," Ito said. "The question is how the company performs. So you have a few people tied up in court; that's not going to send shock waves through a company this size."

Shareholder suits are required by law to first be channeled through corporate auditors whose job it is to police company directors, said Mitsuhiro Kamiya, a partner at Skadden, Arps, Slate, Meagher & Flom LLP in Tokyo. Shareholders can sue the executives directly if auditors don't act within 60 days, he said.

"Unless the former CEO can produce new evidence about which they're not aware, it's highly unlikely that the statutory auditors will take action against the directors".

Fujitsu told Nozoe his links to a fund involved in the potential sale of Fujitsu subsidiary Nifty Corp. were improper because the fund had connections with "antisocial forces," or organized crime, Hata said last month, declining to identify the fund.

Nozoe, who was sick at the time of his September exit, agreed to cite health reasons to avoid damaging the reputation of the firm he headed, Fujitsu said in its March statement.

He agreed to step down because he understood his actions put the firm's reputation at risk, not because of malpractice or illegal actions, according to the statement.

The Tokyo Stock Exchange last month ended a probe into the conflicting reasons given by Fujitsu and determined the firm didn't mislead investors enough to warrant a sanction.

Masami Yamamoto was named in January to take over as president from Chairman Michiyoshi Mazuka, who temporarily assumed the position after Nozoe's resignation through the end of March.

During Nozoe's 15-month stint, the company pushed forward with the sale of its hard-disk-drive business to Toshiba Corp. and agreed to outsource some chip production to Taiwan Semiconductor Manufacturing Co. to cut spending. The company also sought to strengthen its operations in Europe by making Netherlands-based Fujitsu Siemens Computers Holding BV a fully owned subsidiary.

Fujitsu swung to a profit in the third quarter after the company sold money-losing hardware businesses. Net income was ¥4.1 billion in the three months that ended Dec. 31, compared with a ¥40.8 billion loss a year earlier.

The Japan Times