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Wednesday, June 25, 2008
JT execs face shareholders' ire over food poisonings, tax talk
Shareholders of Japan Tobacco Inc. peppered management with questions Tuesday over the food-poisoning scandal involving pesticide-tainted frozen "gyoza" dumplings made in China.
At the beginning of the shareholders' meeting at a Tokyo hotel, President Hiroshi Kimura apologized to the victims and the public. Board members also stood up with Kimura and deeply bowed.
Kimura said JT's food products division saw a 90.1 percent plunge in operating profit to ¥600 million in business 2007, which ended in March, because of the food poisonings.
It was revealed in January that 10 people who ate gyoza imported from China and distributed by subsidiary JT Foods Co. became sick.
One shareholder criticized JT, saying the company's image was tainted because management failed to quickly respond to the incident.
"I feel the way management dealt with it was a big problem," he said.
Another shareholder proposed that JT use only domestic vegetables and meat to ensure safety.
"We realize our customers have strong concerns about products made in China and other countries," JT board member Mutsuo Iwai said.
But he added that in the long term, the company plans to use ingredients from other countries, including China, to "meet the various needs of customers."
JT told its shareholders that it has upgraded its food inspection system, including introducing stricter standards in selecting factories to manufacture its products and building inspection facilities both in Japan and China.
Asked whether the gyoza were tainted in China or in Japan, Iwai said the case is still under investigation and there is little JT can do on its own.
"Police and news reports say the concentration of pesticide shows there is a low possibility that residual pesticide was the cause," he said. "And it is highly likely (somebody) intentionally mixed pesticide at the (Chinese) factory."
On other topics, a shareholder asked about the company's stance over a proposal by lawmakers to raise the price of a pack of cigarettes to ¥1,000 to boost tax revenues. Vice President Ryoichi Yamada said the firm strongly opposes the idea.
"Some say the additional tax revenue should be used to cover social security costs. But why should smokers have to shoulder the (additional) burden?" Yamada asked.
Earlier this month, economic and fiscal policy minister Hiroko Ota said the tobacco levy would be "one of the candidates" for a tax hike to cover ballooning social welfare costs.