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Head of public-private investment fund to step down over conflict with ministry

JIC President and CEO Masaaki Tanaka speaks in an interview with the Mainichi Shimbun on Oct. 16, 2018. (Mainichi/Akinori Miyamoto)

TOKYO -- The head of Japan Investment Corp. (JIC), a public-private fund launched to promote innovation in the country, said on Dec. 10 that he will step down after getting into a conflict with the industry ministry over remuneration and management of the company.

Masaaki Tanaka, 65, president and CEO of JIC, made the announcement at a news conference in Tokyo. He will resign along with eight other board members who hail from the private sector.

JIC will effectively suspend its investment activities after only about 2 1/2 months since it was founded in September with the aim of developing next-generation industries through venture capital investments.

Tanaka and other JIC executives came into a conflict with the Economy, Trade and Industry Ministry over the levels of remuneration for executives. The ministry initially proposed to pay executives remuneration exceeding 100 million yen a year if JIC investments are successful, but retracted the offer in response to criticism that the salaries are too high.

The ministry subsequently presented a pay proposal that would sharply reduce the amount from the original plan, but the executives and the ministry were unable to reach a compromise over the matter.

JIC and the ministry also clashed head-on over the corporation's plan to establish multilayered investment funds in a bid to attract private funds. The ministry opposed the plan and attempted to strengthen its control over the public-private fund on the grounds that it is unclear how far such investments would be successful and how much remuneration JIC executives could gain from investment funds under the organization's umbrella.

According to the ministry, Tanaka, who was opposed to the government's intention to strengthen its involvement in JIC's management, called off consultations with the ministry that aimed to settle the dispute.

In late November, JIC applied with the industry ministry for approval of the remuneration plan originally offered by the ministry. However, the ministry rejected the application on Dec. 3.

Tanaka then warned the ministry that four representative directors from the private sector, including himself, and five outside directors will resign en bloc if it did not comply with the remuneration proposal. "We will take action in unison," threatened Tanaka.

The ministry then hinted at the possibility of dismissing Tanaka. "It's difficult to restore mutual trust," a senior ministry official said.

Masahiro Sakane, 77, who chairs JIC's board, pointed out that the problem is not the levels of remuneration but whether the ministry intends to intervene in JIC's investments.

Tanaka previously served as vice president of Mitsubishi-UFJ Financial Group, Inc. while Sakane serves as an adviser to Komatsu Ltd.

Two JIC board members who hail from the government are expected to stay on, but selecting the successors of Tanaka and the other board members who hail from the private sector will likely be no easy task.

(Japanese original by Kenji Wada and Takayuki Hakamada, Business News Department)

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