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"BAD FOUR" silence Sekisui House employees

ISS and others recommended to vote against Chairman Abe and Vice Chairman Inagaki.  Sekisui House employees were happy to learn of it but don’t speak their minds because the management is ruling the company by fear.

FACTA BUSINESS - May 2020 [Control accelerating]



Ahead of the ordinary meeting of shareholders of Sekisui House scheduled for April 23, 2020, a report was issued that is very understandable.


At the ordinary meeting of shareholders, Sekisui House is seeking the appointment of 12 directors, including Chairman Toshinori Abe, Vice Chairman Shiro Inagaki, President Yoshihiro Nakai, and Executive Vice President Takashi Uchida.  Former Chairman Isami Wada and Director Fumiyasu Suguro have made a shareholder proposal to elect 11 directors including the two.  The focus is on which one is to win.  Glass Lewis, a U.S. voting advisory firm, issued a report recommending to vote against the four - Abe, Inagaki, Nakai, and Uchida - and the ISS also recommended to vote against Abe and Inagaki.


Voting advisory firms recommended

to vote against Chairman Abe

(Photo: Jiji Press)

Former executive unveils Abe's involvement in the fraud


Sekisui House has been making it look like just a fraud victim in a land fraud revealed in 2017, but it is strange to see them having acted in harmony with a fraudulent landlord group.  This magazine pointed that out in an article in the April 2020 issue ("Land Fraud" - AGM to Accuse the BAD FOUR).  The land transaction began when swindlers approached a sales employee at Sekisui House on a piece of land in Nishi-Gotanda, Tokyo.  During the transaction process, the true owner of the land gave the company warnings saying, "I am the real owner.  I request that the provisional registration of land transfer be removed.”  And although some people within the company said that the identity of the seller should be verified, the company ignored it.


In addition, Sekisui House paid 6 billion yen in deposit checks that can easily accommodate money laundering, and the swindlers used 750 million yen out of it to purchase Sekisui House's condominium units that were not well selling.


That's why everyone suspects that Sekisui House and the swindlers may have had some connections, but that is not all.  It seems that Mr. Abe, then President and current Chairman, was deeply involved in this dubious deal.


Less than a month after the fraudulent group approached Sekisui House, Mr. Abe inspected the site.  Two days later, his final approval was granted of the transaction, out of the regular internal approval process.  It might have been because it was classified as a President's project.  And recently, former general manager of Real Estate Department which is responsible for verifying credit of a transaction counterpart as well as for reviewing land contracts, has come to accuse Mr. Abe in a magazine article saying that "Mr. Abe proceeded with the land transaction despite the fact that he was aware of the content-certified mail warnings.”  Sekisui House has denied the allegation, but it is likely that Abe was at the center of the deal.


When the fraud was unveiled, Isami Wada, who was Chairman back then, pursued to dismiss Mr. Abe, but he failed due to the oppositions by Inagaki, Nakai, Uchida and others, and instead, an urgency motion was presented by Mr. Abe, and the board led by new Chairman Inagaki approved of the motion to dismiss Mr. Wada.


A former prosecutor opposed the disclosure of the report


The coup took place on January 24, 2018.  It was more than two years ago.  Therefore, some investors say "Why are you bringing this up again now?"  That's true, but there's a reason for this.


Immediately after the fraud was unveiled, Mr. Wada instructed to conduct an internal investigation.  The investigation committee was scheduled to make a final report at the Board of Directors on January 24, 2018 and have it released to the public.  "One member of the investigation committee strongly opposed the disclosure of the report." (a Sekisui House executive)


Takashi Kobayashi, a former prosecutor, is the member who refused to make it public.  Kobayashi an Osaka District Attorney's Office prosecutor at the time of the "Osaka District Attorney's Office Chief Prosecutor's Falsification Case", known for false accusations against Ms. Atsuko Muraki, a former administrative vice minister of the Ministry of Health, Labor and Welfare.  As a result of the case, Kobayashi had to resign as prosecutor and became a lawyer.  Last year he became well known in an incident that involved Kansai Electric – he was chair of the investigation committee of Kansai Electric on its bribery scandal.


Kobayashi reported the investigation report to the Standing Audit & Supervisory Board, but the Standing Audit & Supervisory Board did not share it with the Board of Directors.  Kobayashi and the Standing Audit & Supervisory Board might have colluded to make amicable arrangements.  The "not stringent investigation report" and its subsequent cover-up drew strong public criticism, and it was even criticized by a third-party committee later set up that it was a "clear misjudgment." In the Sekisui House case, too, Kobayashi refused to release Sekisui House's investigation report, and the public could not learn about the land fraud details.


In the fall of 2019, an economic magazine reported the investigation report, and it was posted on the internet.  Director Suguro who works with Wada has decided to make a shareholder proposal.  The answer to the investors’ question mentioned above is that it is because Kobayashi refused to publish it two years ago.  But Kobayashi alone should not be blamed.  “The BAD FOUR should have been involved”, says a Sekisui House executive.


Maybe because of this, Glass Lewis recommended in its report that shareholders vote against the four.  There still is a corporate governance failure at Sekisui House and if the four remain in power, the situation won’t change – Glass Lewis must have thought so.


But now there is another evidence that the BAD FOUR is accelerating their control - Sekisui House's board meeting rules.


Article 7 of the board meeting rules says, "Director Toshinori Abe as convener convenes board meetings."  You never see anything like this anywhere else and normally it is defined by corporate titles such as "President" and "Chairman."  In addition, Article 9 says, "Director Shiro Inagaki chairs board meetings."  Again, defined by personal name.


The four are called "BAD FOUR, but some insiders say, “Its core are Abe and Inagaki.  Nakai  and Uchida just follow Abe and Inagaki.  Inagaki is the guy who planned the coup in 2018, and Abe may have just followed him."  The board meeting rules may be evidencing this.


Housing companies’ performance heavily relies on how much revenue frontline sales employees secure.   No good housing sales achievements are common to all of the BAD FOUR, and it may be the reason why the following thing happened recently.


Forced sales promotion events during the COVID-19 crisis


Sekisui House held the "Sha-Maison Festa” for three days from March 12 to 14, and the Sumai no Sankan-bi (visits to built houses) event on the weekend of March 14 and 15.  The Sha-Maison  Festa is a nation-wide event for landowners who plan to build rental houses.  The Sumai no Sankan-bi event, another nationwide event, allows people who want to buy a single family house to actually see single family houses.


Houses built in a housing exhibit are not real.  Sha-Maison Festa and Sumai no Sankan-bi properties are real properties in use, so it's very helpful for landowners and home buyers, and it often leads to actual sales.  It's no wonder that Sekisui House is putting special effort into the two events held in March and September every year.


However, this year is different than any of the previous years.  It was on February 24, 2020 when government experts on COVID-19 infections published their view that "the next week or two will determine the fate of all of our efforts."  Two weeks later on March 9, 2020, the government experts concluded that "we are seeing the infection further spreading and need to be even more vigilant," and a number of companies introduced a work from home policy.


It was in early March when everyone recognized that the situation was worsening, but Sekisui House forced the Sha-Maison Festa and Sumai no Sankan-bi events in the middle of it.  “They are both nationwide events, and many employees are involved, but this year many were reluctant saying, ‘Why are we holding the events under this situation?’  Not only Sekisui House employees but also subcontractors had to be involved.  Every time subcontractors are requested to help with such things as road traffic control, and there was no difference at this time." (a Sekisui House executive)


Every year Daiwa House, too, holds events similar to Sha-Maison Festa and Sumai no Sankan-bi.   Their event names are "Rental Housing Field Trip" and "One Home Discovery Seminar".  Sekisui House says, "Daiwa House imitated us”, but Daiwa House did not hold their events this year.


"Holding promotion events now is nonsense since housing demand is gone.  After the Abe-Nakai  administration is put in place, there is no discretion at branch offices / no delegations and everything is decided at the head office.  Despite that, the head office does not make the right decisions at the right time when it is supposed to." (a Sekisui House executive)


There is a website called "SAVE SEKISUI HOUSE" which appears to be in cooperation with Mr. Wada and Mr. Suguro.  There have been a series of posts from employees who say, "I want you to make a change."  However, those employee voices never lead to any action because "the BAD FOUR are ruling the company by fear." (a former Sekisui House employee).


Sekisui House's current management team has been resisting to disclose the details of the suspicious land deal.  The employee voices are being suppressed, prohibited and censored, and no objection is allowed.  The Sekisui House version of "lockout" is considerably deep-rooted.

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