Economy Minister Yukio Edano defended Japan's corporate governance practices Friday amid an ongoing accounting scandal at Olympus Corp. that has tainted the country's image.
Looking at past cases related to corporate governance, Japan's efforts and record were at least on par with the U.S. or even better, Edano told reporters at a press conference at the Foreign Correspondents' Club of Japan.
After initially denying any wrongdoing, camera and medical equipment maker Olympus acknowledged a $687 million payment for financial advice and expensive acquisitions to cover up investment losses dating to the 1990s.
The dubious transactions came to light after the company's then-CEO, Michael Woodford, raised questions about them _ and was promptly fired by the board.
The scandal has prompted criticism that Japan lags far behind other advanced economies in its corporate governance standards, or the rules and processes by which businesses are operated and controlled.
Edano called the Olympus case "unfortunate," and said efforts are needed to avoid recurrences.
But he strongly rejected criticism that Japan lacks proper standards in this regard.
"To say that Japan has no corporate governance is going too far, way to far," Edano said. "Historically, looking at past cases related to corporate governance, Japan is at least at the same level as the U.S. or even better, in term of effort and results."
The American Chamber of Commerce in Japan and other foreign business associations have said Japanese companies tend to appoint only board members with close ties to the company's management or majority shareholder, perpetuating the perception that Japanese corporations are dominated by insiders.
The Japanese government is currently revising its Company law.
To strengthen corporate governance, the ACCJ and business groups from EU, Canada and Australia and New Zealand have urged Tokyo to require companies to appoint a meaningful number of independent outside directors, and require an independent committee to handle board decisions where the risks of self-interest and conflicts are inherently high.
On Thursday, Woodford resigned as a director of Olympus, but vowed to work with shareholders to replace the company's board. The British national _ a rare foreigner to lead a Japanese company before he was fired on Oct. 14 _ was still a member of the board because dismissal from it can only be done by shareholders.
Olympus' shares have plunged since Woodford's dismissal. The company must submit proper financial reports by Dec. 14, or it risks being delisted from the Tokyo Stock Exchange.