Shareholders to sue Tepco executives for $67 billion
By Yoko Kubota
TOKYO | Mon Mar 5, 2012 5:45pm EST
(Reuters) - Shareholders of Tokyo Electric Power Co Inc, operator of the crippled Fukushima nuclear plant in northeast Japan, are suing the utility's executives for a record 5.5 trillion yen ($67.4 billion) in compensation, lawyers said.
The Fukushima Daiichi plant was wrecked by a quake and tsunami last March, triggering the world's worst nuclear crisis in a quarter of a century and swamping the firm with huge clean-up, compensation and decommissioning costs. In the biggest claim of its kind in Japan, 42 shareholders filed a lawsuit in the Tokyo District Court on Monday accusing 27 current and former Tepco directors of ignoring multiple warnings of a possible tsunami and of failing to prepare for a severe accident, lawyers for the shareholders said in a statement.
They want the executives to pay damages to Tepco, which would then use the money to compensate those affected by the disaster. There is deep public anger over Tepco's handling of the crisis and the perceived arrogance of top management, including underplaying the seriousness of the disaster in its early stages and delays in compensating those forced to leave their homes. Government officials have walked a tightrope between that taxpayer anger and keeping afloat a firm that provides electricity to 45 million people in Japan.
Japan's trade minister last month approved nearly $9 billion in additional support for Tepco to help compensate victims of the crisis, but said the government would not go ahead with a plan to inject more money into the utility unless it had more say in its management. "By seeking to hold individuals responsible, we want to correct the collective and systemic irresponsibility in the nuclear industry," Hiroyuki Kawai, one of the lawyers, told a news conference.
Kawai said the record compensation was based on calculations by a government-appointed experts' panel of what Tepco might have to pay to victims and businesses. The company has forecast an annual net loss of 695 billion yen. Tepco spokesman Taichi Okazaki said the company did not comment on matters related to lawsuits.
SENDING A MESSAGE
Japanese courts have previously required individual executives to compensate their companies for mismanagement, but the damages sought have never been on this scale. Kawai believes the shareholders can win their case, but accepts it's unlikely the executives can pay such an amount. One of their main aims is to make directors of other utilities realize they could be held financially responsible in any future nuclear incident, he said.
"Whether we can win in terms of the court decision and whether we can collect compensation are two separate issues," Kawai told Reuters by telephone. "This could be very effective in halting reactor restarts ... Directors of other utilities may have a sense of crisis that they could lose their own homes if they carelessly restart reactors and see another accident."
Only two of Japan's 54 nuclear reactors are currently operating, and by May there may be none, as heightened safety concerns among the public have prevented any re-starts, even after checks.
Some previous shareholder lawsuits have hit executives hard. In 2008, five Janome Sewing Machine executives were ordered by the Tokyo High Court to pay the company 58 billion yen ($711 million) in compensation, local media reported.
And in 1995, former executives at what was then an independent Daiwa Bank were sued by shareholders for $1.45 billion over mismanagement. Six years later, the executives agreed to pay $2 million to the bank in an out-of-court settlement, a fraction of the $775 million the Osaka District Court had ordered them to pay. Camera and medical equipment maker Olympus Corp has bowed to shareholder pressure and sued 19 current and former executives for up to $50 million in compensation over a $1.7 billion accounting fraud.
($1 = 81.5500 Japanese yen)
(Reporting by Yoko Kubota; Editing by Chris Lewis and Ian Geoghegan)
