Exclusive: Harvard was not pressured on Toshiba, ex-Japanese adviser says

By Ross Kerber and Makiko Yamazaki

BOSTON/TOKYO – A former Japanese government adviser said he did not lobby Harvard University’s endowment fund to influence its vote at Toshiba Corp’s disputed shareholders meeting last year, and that the fund should “set the record straight”.

Hiromichi Mizuno, until recently an adviser to the Ministry of Economy, Trade and Industry, was identified by a shareholder-commissioned inquiry this month as a prominent figure in what he called collusion management with METI block the influence of foreign shareholders.

Mizuno told Reuters he volunteered to METI officials to speak with Harvard Management Co when he was about to start a scholarship in college last year.

Mizuno, a board member of U.S. electric vehicle maker Tesla Inc, said he discussed the potential risks to the Harvard fund, known as HMC, on the vote at Toshiba. The main shareholder of the conglomerate, the activist hedge fund Effissimo Capital Management, was demanding seats on the board of directors.

HMC was also an investor in Singapore-based Effissimo, sources told Reuters.

Mizuno made it clear HMC that he was not representing the Japanese government, he said.

“I don’t care how you vote,” Mizuno told the foundation’s leaders.

Mizuno’s comments to Reuters in an interview on Monday night were his first public remarks on Toshiba since the investigation found management colluded with METI block the influence of Effissimo, HMC and other foreign shareholders, and provided further details on the talks. He had previously told the Financial Times that he was not representing the Japanese government.

Mizuno’s account also sheds new light on events at Toshiba. The incidents detailed in the investigation have rekindled concerns about Japan’s corporate governance and its openness to foreign shareholders, and appear to run counter to the government’s long campaign to attract more foreign investment.

A spokesperson for HMC declined to comment for this article.

A senior METI an official with direct knowledge of the case, speaking on condition of anonymity, supported Mizuno’s account and said this was not reflected in the investigation.

Toshiba declined to comment.

The independent investigation found that Mizuno’s role compromised the vote at the July 2020 annual general meeting after HMC, which held a stake of more than 4%, abstained from voting.

It was not clear how HMC had planned to vote at the meeting.

Mizuno told Reuters he was trying to keep his relations with Harvard friendly and asked the fund for clarification “to set the record straight.”

Mizuno is the former investment manager of the $ 1.61 trillion Japanese pension fund. He resigned as special adviser to METI after being appointed United Nations special envoy, the government said in January.

‘VERY INAPPROPRIATE

Part of Mizuno’s account contrasted with the investigation, which cites a HMC letter stating that the foundation received an intrusive request from one person – apparently Mizuno – prior to the shareholders’ meeting and “found the exchange highly inappropriate both in content and in timing.”

The report says that even if Mizuno spoke as a private citizen, shareholders would understand his government influence.

METI has regulatory power over Toshiba’s foreign shareholders as the company is viewed as a strategic asset, manufacturing nuclear and defense equipment.

Mizuno told Reuters in a follow-up message on Tuesday that it served as a channel for messages from HMC at METI and Toshiba after the fund became frustrated with the company, which was plagued by accounting and governance issues.

Toshiba shares rallied after hitting a three-year low last year. Shares are up 68% this year, outperforming an 8% rise against Tokyo TOPIX index.

Mizuno said the executives of the $ 41 billion endowment, CEO NP “Narv” Narvekar and Chief Investment Officer Rick Slocum, praised his contribution.

HMC did not make Narvekar or Slocum available for an interview.

Effissimo had nominated three candidates to Toshiba’s board of directors at the July 31 meeting, all of whom were opposed by management. None were elected although one received 44% of the vote.

Mizuno said he wanted HMC understand the potential consequences of voting, given that the new rules on foreign ownership in Japan could put in place a control HMClinks with Effissimo.

Sources previously told Reuters that Mizuno expressed the possibility of a regulatory investigation if HMC vote against the interests of Toshiba management.

Mizuno told Reuters he wanted to help HMC avoid surprises, and told Narvekar to vote however HMC felt he was right to discharge his fiduciary duty.

“I made it clear that I was only trying to give enough information” for the fund to understand how things worked in Japan, he said.

($ 1 = 110.3700 yen)

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