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Thursday, Sep. 29, 2011

Olympus takes whistle-blower to highest court


By YURI KAGEYAMA
AP

Japan isn't a nation of whistle-blowers, but Masaharu Hamada is among that rare breed.

News photo
Face of courage: Masaharu Hamada, a 50-year-old salesman for Olympus Corp., is interviewed in Tokyo on Sept. 20. AP

The 50-year-old salesman for camera and precision-equipment maker Olympus Corp. is about to become rarer still.

His case alleging he was demoted in reprisal for merely relaying a supplier's complaints is headed to the Supreme Court. It would be the first whistle-blower case to reach that level.

"Somebody has to do it," Hamada said last week. "It's a miracle I even came this far."

Japan is behind some Western nations in protecting whistle-blowers. Corporate loyalty is king and outspoken employees are often subjected to bizarre punishments, such as assigning them closet-size offices.

A law to protect whistle-blowers was enacted only in 2006 and critics say it is inadequate because it doesn't penalize companies that lash out at their accusers. To pursue legal action, whistle-blowers must also stay with the company as the law only applies to employees.

Major companies provide lifetime employment, although they more freely fire contract and part-time workers. That means employees such as Hamada become targets of cruel harassment designed to silence them or make them quit.

Hamada was shunted to a corner of the office and ordered to take rudimentary tests on quality control designed for new hires. Sometimes the supervisor would give a grade that was minutely short of the passing level, just to get on his nerves, Hamada recalled.

"It is no wonder people commit suicide at Japanese companies," he said, acknowledging he was nearly driven to a breakdown.

Only a handful of whistle-blowers have come forward in the past few decades.

Hiroaki Kushioka, who exposed price-rigging at his trucking company three decades ago, was assigned for years to a tiny office.

He often spent his time gardening and shoveling snow at work, although he had previously overseen contracts with clients.

Another was Toshiro Senba, who blew the whistle on fellow police officers who were forging receipts to wine and dine on public money. His department took his gun away, declaring him too unstable to carry a weapon.

"There is a substantial risk for people who seek to do the right thing," said Jay Klaphake, an associate professor at Ritsumeikan University in Kyoto.

Laws make it difficult for employees to obtain evidence on the reasons for transfers, demotions and pay cuts crucial to prove their case, and they must pay attorney fees, while damages won are tiny by Western standards.

"It is no secret that the Japanese legal system is designed to favor the bureaucracy and big business," Klaphake said.

Hamada sued Olympus in 2008, saying an internal transfer was punishment for relaying a supplier's complaint that its best employees were being lured away by Olympus. Hamada first relayed the complaints to his boss, then to the company's compliance unit.

Last month, the Tokyo High Court reversed an earlier district court decision and ordered Olympus to pay Hamada ¥2.2 million in damages for the transfer from a sales division, where he had a good record, to a more solitary assignment in research, and later in quality control.

Olympus appealed this month, sending the case that pits a "little salaryman" against a giant of Japan Inc. to the highest court. The outcome could set a precedent for how companies deal with whistle-blowers.

Olympus, which has called the Tokyo High Court ruling "regrettable," said it decided to appeal because the court decision was vastly different from its view.

The Supreme Court may decide against hearing Hamada's case. But then, the Tokyo High Court decision will stand — a victory for Hamada.

All Hamada wants is to be a salesman again, the post he had before the reprisals began.

He boasts he won a trophy as the best Olympus salesman in the U.S. during his overseas stint in the late 1990s and early last decade. When he appears in court, he makes a point of wearing a blue tie, the Olympus color.

"I have always wanted to make Olympus a better company and elevate the Olympus brand," he said. "I have no regrets. I have confidence I did the right thing."



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