Daio Paper to eliminate four companies among consolidated subsidiaries in wake of scandal involving former chairman
January 16, 2012
– Daio Paper said on Jan. 14 it will cut four companies from its list of consolidated subsidiaries, a move that follows the scandal-ridden company’s ouster of its former chairman from its board of directors, The Japan Times reported on Jan. 16.
Former Chairman Mototaka Ikawa was kicked off the board over his massive borrowings from group subsidiaries. In addition, his father, Takao Ikawa, who was an adviser, has left the board.
But since both still own large stakes in dozens of subsidiaries, Daio Paper will apply its new group coverage plan starting with its earnings report for the period covering April to December 2011.
Daio Paper will also turn 24 of the 37 subsidiaries into equity-method affiliates, in which the company has up to 50% of the voting rights, The Japan Times reported.
But it said total holdings would decline because of the departure of Ikawa and his father.
In the near future, Daio Paper plans to announce the impact the changes will have on its performance, which it is currently in the process of calculating.
The Japan Times reported on Dec. 23 that former Chairman Ikawa was hit with charges of an additional 2.23 billion yen (US$28.5 million) by Tokyo prosecutors for damages caused to three subsidiaries, including tissue manufacturer Elleair Paper Tech Co. As a result, charges grew to a total of 5.53 billion yen worth of damages for aggravated breach of trust in connection with the chairman's borrowing money from four Daio group subsidiaries.
The primary source of this article is The Japan Times, Tokyo, Japan, on Jan. 16, 2012.