No need for a clash of values, between FT and Nikkei

27.07.15 Publication:

Old Tokyocorrespondents 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
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

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.