Cablegate: Changes Come with Japan Post Holdings Co. Board

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UNCLAS SECTION 01 OF 02 TOKYO 002499

SENSITIVE
SIPDIS

STATE FOR E, EEB AND EAP/J
NSC FOR LOI, RUSSELL
USTR FOR AUSTR CUTLER, BEEMAN, LEE, AND HOLLOWAY

E.O. 12958: N/A
TAGS: ECON EFIN PGOV JA
SUBJECT: CHANGES COME WITH JAPAN POST HOLDINGS CO. BOARD
MEETING

REF: TOKYO 2432

SENSITIVE BUT UNCLASSIFIED. CONTAINS BUSINESS SENSITIVE
INFORMATION.

1. (SBU) SUMMARY: Former Ministry of Finance (MOF) Vice
Minister Jiro Saito was named president of Japan Post
Holdings Co. at a, October 28 board meeting. Most of the
former board members, who hail from the private sector, were
forced to resign. The new board, which doubled in size to 18
members, includes many former bureaucrats and public utility
executives. The GOJ is moving ahead with the bill to halt
the sale of Japan Post Group stock and will likely abolish
the Postal Services Privatization Committee (PSPC). END
SUMMARY.

NEW LEADERSHIP AND VASTLY EXPANDED BOARD OF DIRECTORS
--------------------------------------------- --------

2. (SBU) Former MOF Vice Minister Jiro Saito replaced
Yoshifumi Nishikawa as president of Japan Post Holdings Co.
on October 28 (reftel). Saito has been a somewhat
controversial pick, since the Democratic Party of Japan (DPJ)
has in the past sought to ban former bureaucrats from top
administrative posts. When asked about this issue in a
plenary session of the House of Representatives, Prime
Minister Hatoyama said, "I believe he is competent and the
right person should be placed in the right position... We
just have to see how he manages."

3. (SBU) The board of directors was also doubled in size
from nine to 18 members. Of the original board members, only
Toyota Motor Corp. Senior Advisor Hiroshi Okuda and
Mitsubishi Heavy Industries Advisor Takashi Nishioka remain.
Inviting additional criticism for going back on its pledge to
keep ex-bureaucrats from senior administrative posts, the
Hatoyama Administration has appointed former Assistant Chief
Cabinet Secretary Atsuo Saka and former Postal Services
Agency senior official Seijiro Adachi as deputy presidents.

4. (SBU) Other new board members are: Seijiro Sekine
(former executive at Canon, Inc.); Toshinari Takai (former
managing director of Long Term Credit Bank of Japan); Tadashi
Okamura (Chairman of the Japan Chamber of Commerce and
Industry and adviser to Toshiba Corp.); Chizuko Miura, aka
Ayako Sono (novelist); Akio Harada (former Prosecutor
General); Hiromitsu Ishi (former president of Hitotsubashi
University); Hidekazu Inoue (senior adviser to Nippon
Telegraph and Telephone East Corp.); Koichi Sugiyama (former
special adviser to Mitsubishi Heavy Industries); Shingo
Matsuo (chairman of Kyushu Electric Power Co.); Kyohiko Koike
(mayor of Kamo City, Niigata Prefecture); Goro Kamino (CEO of
Chubu Gas Co.); Taro Irimajiri (president and CEO of
Irimajiri Group,Inc.); and Takao Watanabe (president Nishijin
Textile Industrial Association).

BILL TO FREEZE SALE OF SHARES AND DOING AWAY WITH THE PSPC
--------------------------------------------- -------------

5. (SBU) Also on October 28, the outline of a bill to freeze
the sale of Japan Post Group companies' stock and the sale of
a chain of hotels owned by the group was presented to members
of the ruling coalition. The bill will be presented to the
Cabinet on October 30 for its approval, before going to the
Diet for action. Furthermore, the Nikkei newspaper reports
that it is likely that the Postal Services Privatization
Committee (PSPC) will be abolished.

7. (SBU) COMMENT. In a follow-up conversation to reftel, a
local U.S. insurance industry representative said again that
these actions are not a surprise and the DPJ is "doing what

TOKYO 00002499 002 OF 002

they said they were going to do." The changes are coming
quickly, and industry and contacts in the bureaucracy appear
to be taking a wait and see approach to see how things play
out over the coming months. It remains clear that State
Minister for Financial Affairs and Postal Reform and People's
New Party leader Shizuka Kamei, who is spearheading the
changes, has a clear mandate from his larger coalition
partner, the DPJ, to take bold measures. At an
Embassy-organized briefing for new Diet members, the DCM
repeated the United States does not take a position either in
favor or against privatization, but he made clear once again
our position that there must be a level playing field between
Japan Post Group companies and the private sector. One
puzzling facet to the latest developments is the appointment
of so many former members of the bureaucracy, especially
considering the DPJ's previous opposition to such
appointments and its stated intention to ban ex-bureaucrats
from top posts. END COMMENT.
ROOS

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