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Saturday, March 1, 2003

Executive, academic to head revival body


By TOMOKO OTAKE and MAYUMI NEGISHI
Staff writers

The Cabinet decided Friday to appoint a former Nomura Securities Co. executive and a high-profile academic to lead a proposed government-backed entity tasked with restructuring indebted firms and revitalizing industries.

News photo
Atsushi Saito (left) and Shinjiro Takagi

Atsushi Saito, a former vice president at the nation's biggest brokerage, will assume the presidency of the industrial revival body when it begins operations around May, and Shinjiro Takagi, a professor of law at Dokkyo University who is also known as a leading corporate rehabilitation expert, will head a panel of experts that will judge whether debt-laden firms are salvageable.

The much-awaited appointments come after months of conflict and confusion within the government, which had been unable to find anyone daring enough to pass life-or-death rulings on private-sector businesses.

In announcing the appointments, industrial revival minister Sadakazu Tanigaki stressed that the two candidates are "blessed with the most appropriate experience and capabilities."

"(The top managers of) the revival body must be fair, versed in corporate rehabilitation cases and trusted by the financial markets," he said. "These two men are an excellent choice in that sense."

But the selections surprised many experts who had expected a more high-profile businessman to take up the president's post.

"Saito who?" asked Kenji Ueda, executive director of U.S. investment fund Ripplewood Japan Inc. "I'm glad they found somebody, though. I know I wouldn't want to have his job."

Government officials reportedly tried to woo Akira Kiyota, president of Daiwa Securities SMBC Co. Kiyota denied that he was ever up for the job, according to recent media reports.

"Government officials kept coming to us for names of rehabilitation experts who might be willing to head the body, but I couldn't think of many," a senior executive of another foreign fund said.

While Takagi is better known for his involvement in the rehabilitation of ailing supermarket chain Daiei Inc., his appointment is expected to raise concerns over his impartiality in choosing companies to rehabilitate.

"Mr. Takagi's reputation is revered among executives, so this is a coup," said C.J. Wilson, managing director of Global Alliance LTD, an investment advisory firm. "But the filtering of who to help and how could be a quagmire of favoritism and conflicts."

As president, Saito's biggest job will be to find sponsors for companies that are put under management revitalization, Tanigaki said. Sponsors will eventually buy their resuscitating companies.

Takagi, meanwhile, will oversee the experts' committee, tasked with determining whether companies are salvageable and, if so, how much to pay banks for their problem loans.

Saito, 63, was formerly vice president of Nomura Securities Co. He stepped down after the firm was discovered in 1997 to have illegally paid off corporate extortionists.

He was chairman of then Sumitomo Investment Co. until he retired in December.

As administrator of the former Kyoei Mutual Life Insurance Co., which failed in October 2000 with 4.5 trillion yen in liabilities, Takagi masterminded a reconstruction plan that promised insurance payments to policyholders without resorting to using public funds. The deal propelled Takagi onto center stage as an expert in rebuilding heavily indebted companies.

He is currently an adviser for a public-private reconstruction fund for debt-ridden Daiei. He accepted that post after Daiei's largest creditors completely ignored a set of guidelines he helped draft on debt forgiveness.

The revival body is designed to buy up loans extended to ailing companies, help them carry out restructuring plans over a three-year period and try to sell the loans back to the private sector.

The entity will be dissolved in five years. Its ultimate purpose is to expedite the disposal of bad loans that have crippled the nation's economy for more than a decade.

The entity will also purchase bad loans extended by banks to firms that are not about to collapse but have benefited from waivers. These loans would mostly involve the secondary creditor banks of troubled borrowers, rather than their main creditors.



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