Nikkei buys the Financial Times: Have The Lunatics Taken Over the Asylum?

On Friday, four executives from the Nikkei media company talked to the press after purchasing Financial Times, the U.K.’s 127-year-old newspaper, for a reported 1.3 billion dollars. The main reasons chairman Tsuneo Kita cited included a desire to expand Nikkei’s reach beyond Japan and to improve its online presence, something FT is much more adept at doing. Investigative journalism is also something the FT is 100 times more adept at doing than Nikkei’s flagship newspaper, which has been likened to a cheerleader or in-house publication of the Japan Business Federation (経団連). Can this merger create synergy or will it be more like MOX fuel?

Nikkei takes over the Financial Times. Meet the new boss, not the same as the old boss. Will we get fooled again?
Nikkei takes over the Financial Times. Meet the new boss, not the same as the old boss. Will we get fooled again?

 

Many are wondering how hands-on Nikkei will be—or rather how much it will interfere– when it comes to the Financial Times reporting on Japanese businesses and their semi-frequent controversies. Recently, while magazines like ZAITEN were reporting on Toshiba’s “creative accounting” or “improper accounting” as “fraudulent accounting” as early as June, Nikkei continued to use the improper and incorrect term “improper accounting” until the Toshiba friendly third-party committee officially described Toshiba’s over a billion dollars of inflated profits on the books as “false.”

In the 2011 Olympus Scandal, The Financial Times was the first English language paper to break the story, while Nikkei’s Keizai Shimbun (日経新聞) waited about a week to fully report on it and tacitly acknowledge that fraudulent accounting had taken place. Nikkei CEO Naotoshi Okada admitted they could have done a better job reporting on the scandal: “Maybe it is true we were somewhat delayed with reporting on the Olympus scandal,” Okada said. “But this is not because we withdrew ourselves from covering the scandal.”

When asked about whether these contrasting traits would affect the Financial Times’ ability to report stories on time and in their entirety, Okada was first puzzled, not being a fluent speaker of English. I had to ask the question stated that there would be minimal change to how Financial Times operates and emphasized they will be protecting its “editorial independence.”

“Nikkei has no intention to force Financial Times to do editing and reporting as Nikkei wants it done,” Okada said. “Nikkei and FT are totally separate in terms of following respective editorial procedures and policies until the articles are formulated. They’re independently figured out. Nikkei acquiring FT will not result in articles assigned by Nikkei to FT. That is what I mean by ensuring independent right of editing.”

Not trying to make too many promises, Okada then added that acquiring FT still means collaborations will still occur to a certain extent.

“With the acquisition here’s going to be exchange of human resources and of course within editorial companies there’s going to be more frequent exchange of views, but we will still respect that FT is independent.”

In response to the purchase, Michael Woodford—a former CEO at Olympus who was fired for exposing the 1.7 billion dollars major accounting scandal— said that “the media in Japan is self-serving and deferential to powerful forces, and the Nikkei is not regarded as being independent of corporate Japan.”

Woodford was fired for raising questions about payments for financial advice and payments to front companies. He later wrote a book called Exposure:Inside the Olympus Scandal How I Went From CEO to Whistleblower detailing what had happened at Olympus and also expressing thanks to the Olympus employee who had the courage to blow the whistle and to FACTA (a Japanese publication) and the Financial Times for writing the truth.

“Because of this reality, (of Nikkei subservience to corporate interests rather than the interests of the general public), if the FT had been owned by Nikkei at the time of the Olympus scandal I would have unquestionably gone to the New York Times or the Wall Street Journal instead,” Woodford said in a personal statement.

“While I’m sure the FT will be committed to maintaining its editorial independence, I’m deeply troubled that the ‘subliminal effect’ of being owned by Nikkei will make it less willing to publish articles critical of corporate Japan, which very much includes the Nikkei itself which has long tentacles and powerful influence in the country.

This is a sad moment for journalism, not only for this country but also globally.”

The Nikkei Buys The Financial Times. The Financial Times Sells Out To The Nikkei. Two stories and the same story.
The Nikkei Buys The Financial Times. The Financial Times Sells Out To The Nikkei. Two stories and the same story.

Q & A Memo

*The press conference was held yesterday, almost covertly at 5pm at the Imperial Hotel. The Foreign Correspondent’s Club of Japan was notified roughly around 4pm, giving many foreign reporters outside the press club system little time to prepare.

A last minute notice of the Nikkei Press conference
A last minute notice of the Nikkei Press conference

Jake Adelstein, the editor-in-chief of Japan Subculture Research Center notified me. He had covered the Olympus fraudulent accounting extensively and also wrote the afterword to Michael Woodford’s book. He dispatched me to the press conference, as soon as he heard, here’s the question I asked:

“The Financial Times broke the story on the massive Olympus Accounting Fraud while your paper ignored it and was a mouthpiece for Olympus for the first week. Why should we believe you’ll protect the FT tradition of investigative journalism in Japan?”

The answer from Nikkei was as follows (translated from the Japanese)

“Maybe it is true we were somewhat delayed with reporting the Olympus scandal. But this is not because we withdrew ourselves from covering the scandal. Nikkei has no intention to force FT to do the editing and reporting as Nikkei wants it done. Nikkei and FT are totally separate in terms of following respective editorial procedures and policies until the articles are formulated. They’re independently figured out. Nikkei acquiring FT will not result in articles assigned by Nikkei that are covered by FT. That is what I mean by ensuring independent right of editing. With the acquisition here’s going to be exchange of human resources and of course within editorial companies there’s going to be more frequent exchange of views, but we will still respect that ft is independent.”

Jake Adelstein contributed to this report. 

Japan Passes Draconian Secrecy Bill Into Law: Journalists, Whistleblowers are now “terrorists”

December 9th, Tokyo* (Updated from December 7th post) 

The Prime Minister Abe Shinzo (LDP) led ruling coalition passed the ominous new Designated Secrets Bill yesterday in the middle of the night on December 7th (Friday, Tokyo time), apparently fearing that the light of another day, or the harsh radiation of the truth, would cause the legislation to shrivel up and die. The ruling government cut off debate and forced a vote in the upper house of Japan’s parliament, The Diet, before the clock could strike midnight. 130 were in favor, 82 were opposed.

The law will punish journalists and whistleblowers who divulge government secrets with up to ten years in prison, and up to five years for those who “instigate leaks” (ask questions about state secrets). There is no independent third-party organization set in place to monitor how the law is applied and it gives every ministry and the smallest  government agency or related committee carte blanche to declare any inconvenient information “top secret.”

Prime Minister Shinzo Abe, the LDP, Komeito, and “Your Party” relentlessly pushed the bill forward, despite a sudden dip in cabinet support rates to below 50% and increasing opposition within Japan and the world. Earlier this week, the LDP Secretary General, Shigeru Ishiba, labeled the growing protests “tantamount to terrorism” which prompted more public outcry. There were estimated to be 15,000 people outside Japan’s parliament (The Diet) chanting in protest when the bill was passed.

We don’t know what will be a secret. We don’t know who will be kept private under this law. And it’s a law that doesn’t inform the citizens of anything, so I oppose it… The current administration is slowly trying to create a country that has the ability to fight a war. I’ll continue to fight against this law, because it is the beginning of such a country. —Unemployed, 53, Yoriko W●●●, who protested the bill on December 6th

Every major news organization, publishing group, human rights group,  in Japan opposed the bill. Even the Doctor’s and Dentist’s Association finally voiced disapproval of the draconian legislation. According to opinion polls, only 25% of the public supported it, and 50% opposed it.

The aims of this bill are not drawn out that clearly. We already have many laws against the leaking of information. The Civil Servant’s Laws etc (国家公務員法)So I don’t know why this law is necessary. Japan is a country that needs information to be open. This law stops the free flow of information and makes it hard for journalists to report on their stories. Kanna M●●● (46)

The Committee to Protect Journalists, in a post, Japan: State Security Does Not Justify Restricting Information succinctly summarizes the major problems with law as follows:

The (law) will effectively allow the government to proclaim any potentially embarrassing information a “state secret” and to keep it from the public for 10 years with the opportunity to extend that period.  Under the new law, a whistleblower could face up to 10 years in jail for publishing what the government deems a “state secret.” That level of punishment for what is arguably not a crime is not protective. It’s repressive.

Over 80% of the Japanese population fears that the new laws will be used to cover up scandals and hide the truth from the public.

One individual who shares that fear is Michael Woodford, the former CEO of Olympus, Japan’s mega optical maker. Mr. Woodford courageously exposed 1.7 billion dollar accounting fraud at the company while he was still the CEO, at great personal risk, because he believed the truth had to be known. The mainstream Japanese media and associated parties went to great lengths to ignore his whistle blowing. Even the Financial Services Agency, which is supposed to ensure the transparency of Japan’s financial markets, made efforts to bury the story and leaked information which suggested that no criminal activity had been committed.  It was the persistent investigative reporting of Japanese magazines like FACTA (which broke the story), ZAITEN and follow-ups by the foreign press that made the case impossible for law enforcement to ignore.

Michael Woodford uncovered a 1.7 Billion dollar accounting fraud at Japan's Olympus Corporation. He blew the whistle and repercussions were swift.
Michael Woodford uncovered a 1.7 Billion dollar accounting fraud at Japan’s Olympus Corporation. He blew the whistle and repercussions were swift.

 

Here is what Mr. Woodford had to say in response our request for a comment. He eloquently summarizes the problems of the bill from his own personal experience.

“As someone who during the Olympus scandal experienced first-hand the
deferential and self-censoring nature of much of the Japanese media, I’m
profoundly concerned by the new state secrecy law. I remember a
discussion with a leading Japanese financial journalist in January 2012,
(held in front of Jonathan Soble of the Financial Times who broke the story)
as to what would have happened if I had given them the file supporting my
allegations, as opposed to a Western media outlet. The journalist was
extremely honest in stating that they would have loved to have run the story
but the editor would never have allowed this. The message was clear; you do
not challenge a large Nikkei listed company of wrongdoing, regardless of the
strength of evidence. I found this at the time profoundly depressing, as in
developed democracies it’s the media which is the most effective mechanism
for holding the powerful to account. We have seen this in practice from
everything from Watergate to British parliamentarians being exposed for
abusing their expenses. 

Of course, every country has a fundamental right to protect its citizens’
interests and there is an obvious need for some issues relating to national
security to be secret. However, it is the vague definition in the new bill
of what actually constitutes a state secret which potentially gives
officials carte blanche to block the release of information on a vast range
of subjects. Whenever I’m asked to comment on the disputed islands in the
East China Sea and ongoing tensions with China, I always emphasise that
Japan is a peace-loving democracy, but this loosely worded bill, in my
opinion, is more characteristic of the state controls of the world’s
autocratic regimes. In essence, anything which makes a journalist in Japan
even more uncomfortable with exposing wrongdoing, wherever it may exist, is
a worrying development when transparency and openness should be the way
forward.

 

 So it goes in the land of the setting sun….

★★★★

*Note: This and other articles on the secrets bill at Japan Subculture Research Center may be quoted at length without permission. If possible, please credit the source in your posts or article. Also, I consider Michael Woodford to be a stand-up fellow, good friend, and I wrote the afterword to his book. Therefore, I may lack objectivity in believing him to be absolutely correct. Just so you know.