Japan Post Group’s corporate governance seriously deficient

The Yomiuri ShimbunThe lack of corporate governance is too dreadful to watch, with respect to the latest case of inappropriate contract-winning. All possible measures must be taken to uncover the whole truth behind the problem while also aiding customers who have suffered losses.

The issue concerns the discovery of a large number of contracts inappropriately drawn up by Japan Post Insurance Co., a corporation under the umbrella of Japan Post Holdings Co. The number of questionable cases has reached 183,000. Investigations have been made into contracts signed over the past five years, and their results show that the total number of dubious cases is double an initial figure of 93,000.

The new figure includes a noticeable number of particularly heinous cases, including ones in which employees used elderly persons’ trust in post offices to their own advantage by making the elderly sign unnecessary contracts to fulfill the quotas set for the employees. Their inclination to treat customers so cavalierly cannot be overlooked.

Japan Post Holdings’ earnings structure is such that its poor performance in the mail-delivery business is made up for by profits gained by its financial arms, Japan Post Insurance and Japan Post Bank Co. One wonders whether the holding company may have coerced employees in charge of sales to increase their sales through improper means while promoting the privatization of its operations. Japan Post Holdings President Masatsugu Nagato and other top officials must bear a heavy responsibility in this respect.

At a recent press conference, Nagato apologized for the latest situation, saying: “We have greatly betrayed the trust in us. I feel gut-wrenching grief.” Japan Post Holdings is set to investigate a total of about 30 million signed contracts to determine whether insurance policies have been sold to customers in a manner that does not meet their wishes. It has also said documents will be sent to customers and, if they wish, home-visit investigations will be made.

Priority must be placed on making such efforts as canceling contracts concluded in a manner disadvantageous to customers and repaying them the premiums received in excess.

Probe root of betrayal

Japan Post Insurance had undergone a continued downward trend in the number of contracts signed due to a sharp drop in yields accrued from savings-based insurance products that make up its main business. This seems to have made it even more difficult for employees to achieve their quotas, leading to the widespread practice of selling insurance policies in an inappropriate manner.

At a press conference in June, Nagato referred to the cause of the problem, saying, “Our present method for assessing employees’ achievements is customer-focused, so I do not want to go along with the argument that their quotas were the cause.” It must be said that he had not grasped the realities of employees in charge of sales work.

Japan Post Holdings has said it will abolish the quotas set for the sale of insurance policies in the current fiscal year and that in the next fiscal year and beyond, its business goal will be replaced with a target that attaches importance to the continuity of previously signed contracts over the value of insurance policies newly sold. However, its response to the problem comes much too late.

Another focus of the matter is how much Japan Post Holdings was aware of the problem when it sold some Japan Post Insurance shareholdings in April.

If the holding company had sold off its shareholdings at a high price before the price fell while being aware of the misconduct in question, it constitutes a betrayal of investors.

Japan Post Holdings has explained that, although it knew complaints had been received from customers, it did not regard the situation as a company-wide problem.

“If a case involving policyholders’ losses occurs, it must promptly be made public. Transparency is important,” Kazumasa Iwata, chairman of the government’s Postal Privatization Committee, said outspokenly of the problem. He had every reason to say so.

The Japan Post Group has said it will issue a final report on the details of the inappropriately concluded contracts by the end of the year. Thoroughly probing the root of the problem to get rid of all evils will serve as a first step toward restoring the trust it has lost.

(From The Yomiuri Shimbun, Aug. 5, 2019)Speech


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