Bill Emmott - International Author & Adviser


No need for a clash of values, between FT and Nikkei
Financial Times - July 27, 2015

Old Tokyo correspondents such as myself think of Japan as the country that abolished news, as a place of processes and trends rather than big events. So it came as a surprise that corporate Japan produced not just one big news splash but two last week: the Toshiba accounting scandal and Nikkei’s purchase of this paper. Beyond surprise, however, the two events raise a common concern about Japan’s corporate culture and the way it is reflected in the country’s media. Is the concern justified? Yes, but also no.

Admittedly, no one has really criticised Japan’s main business daily, the Nihon Keizai Shimbun (known as the Nikkei), for failing in the absence of a whistleblower to uncover the Tosh­iba scandal , any more than The Wall Street Journal was held culpable for failing to unearth Enron’s misdeeds. But plenty — led by Michael Woodford, the British former boss of Olympus — do criticise Nikkei Inc for turning a blind eye to the scandal at the Japanese optics company in 2011, even though it had been revealed by a small financial magazine, Facta, and then the Financial Times. In Mr Woodford’s view, shared by many foreign investors, Nikkei’s publications are too close to the corporate establishment. On this view, even if they had been presented with the inside story on Toshiba, Nikkei would not have published it.

So there is the common concern: corporate Japan is prone to scandal, despite years of pressure[FROM WHOM?] to strengthen corporate governance, and yet is not being held to account by mainstream business media. Thus when Tsuneo Kita, Nikkei’s chairman and chief executive, said on Friday that “the philosophy and values of the FT are exactly the same as ours”, it was reasonable to ask: “What can he mean?” Should he be believed when he says he will maintain the FT’s editorial independence, and indeed standards?

I cannot speak for either side, even though I am writing for the FT and I also write a regular column for Nikkei Business, the weekly magazine. But I do have some explanations for the way things work in Japan, including in the media. For as Mr Kita’s colleague, Naotoshi Okada, president of the newspaper, said: “A deal like this will be about understanding and trusting each other.”

Japan is not a culture where the rocking of boats is welcomed, whether at a local school board or a corporate giant. Nor, though, is it a venal culture. For example, while the Olympus affair (in which huge phoney transactions were used to try to cover up 20-year-old losses) cannot have been a victimless crime, it was in a sense a criminal-less one: none of those involved were lining their own pockets. They were acting, even if misguidedly and highly deceitfully, in what they saw as the interests of the business.

The result is that the culprits were viewed in Japan with sympathy, or at least tolerance. It is not clear if the same will be true of the Toshiba executives who faked their accounts, since they were covering up more recent losses. Much de­pends on whether the government uses Toshiba as a cause célèbre to help change corporate governance. There is some sign of such a change, but the main purpose of the government’s push on governance does not seem to be ethics or improving corporate performance. It appears to be to pressure boards to spend their cash hoards on capital investment or higher dividends to boost the economy.

Nikkei Inc has just spent its hoard on buying a foreign company — the FT — from the UK’s Pearson. Since Nikkei is a private company, these governance strictures may not apply to it but Japanese culture does apply, and is important in understanding how this media group thinks.

As the Olympus affair shows, Nikkei Inc is not a boat-rocker; nor does it see its role as being investigative, in the sense of holding power to account. It is not a force for cleaning up scandals, corporate or otherwise. But this is true of all the mainstream Japanese newspapers.

Compared with British, US or French media, great newspapers such as Yomiuri, Asahi, Mainichi and the Nikkei are fairly non-adversarial. They compete for scoops, but largely about information rather than revelations, and argue about public policy more than performance. Investigative and adversarial journalism exists mainly in magazines.

But Nikkei Inc does what its Japanese readers want and expect, above all by providing them with reliable, timely information. Now, as owner of the FT, it will be serving a different sort of reader, in a different language and with different needs and expectations. So if the Nikkei’s main “values” are about giving readers what they want and expect, there need be no inconsistency with those of the FT despite the organisations’ different cultural backgrounds and attitudes to boat-rocking or accountability. 


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