VZCZCXRO7391
PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #3130/01 1910101
ZNR UUUUU ZZH
P 100101Z JUL 07
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 5323
INFO RUEKJCS/SECDEF WASHDC PRIORITY
RHEHAAA/THE WHITE HOUSE WASHINGTON DC PRIORITY
RUEAWJA/USDOJ WASHDC PRIORITY
RULSDMK/USDOT WASHDC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC//J5//
RHHMUNA/HQ USPACOM HONOLULU HI
RHHMHBA/COMPACFLT PEARL HARBOR HI
RHMFIUU/HQ PACAF HICKAM AFB HI//CC/PA//
RUALSFJ/COMUSJAPAN YOKOTA AB JA//J5/JO21//
RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA
RUAYJAA/CTF 72
RUEHNH/AMCONSUL NAHA 4387
RUEHFK/AMCONSUL FUKUOKA 1967
RUEHOK/AMCONSUL OSAKA KOBE 5551
RUEHNAG/AMCONSUL NAGOYA 1064
RUEHKSO/AMCONSUL SAPPORO 2766
RUEHBJ/AMEMBASSY BEIJING 7803
RUEHUL/AMEMBASSY SEOUL 3863
RUCNDT/USMISSION USUN NEW YORK 4946

UNCLAS SECTION 01 OF 10 TOKYO 003130 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA; 
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION; 
TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE; 
SECDEF FOR JCS-J-5/JAPAN, 
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA 
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR; 
CINCPAC FLT/PA/ COMNAVFORJAPAN/PA. 
 
E.O. 12958: N/A 
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA
 
SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 07/10/07 
 
 
Index: 
 
1) Top headlines 
2) Editorials 
3) Prime Minister's daily schedule 
 
Opinion polls: 
4) Tokyo Shimbun's poll finds DPJ (Minshuto) outpacing the LDP with 
voters in both the proportional and district seats; 53 % non-support 
rate for Abe Cabinet 
5) Kyodo trend poll: Asked which party they would vote for, 24 % 
pick DPJ, 17 % select LDP 
6) Asahi poll: 51 % of voters against raising the consumption tax; 
40 % accept it as necessary 
 
7) Assistant Secretary Hill to visit Tokyo at week's end 
 
8) Foreign Minister Aso to travel abroad on June 30, the day after 
the Upper House election, to the Philippines for ASEAN plus 3 and 
ARF conferences 
 
9) A shocking 77 % of Japanese negative about socializing with 
foreigners in GOJ poll 
 
Political affairs: 
10) Prime Minister Abe evasive in his answers about Farm Minister 
Akagi's money scandal, refusing to pursue accountability 
11) DPJ to strengthen pursuit of Abe government on the Akagi scandal 
 
12) Ozawa-influenced manifesto (election campaign promises) issued 
by the opposition DPJ 
 
13) Ministry of Internal Affairs and Communication sets policy 
measures for dealing with the pension mess 
 
14) Bulldog Sauce Company's defense measures against takeover by 
Steel Partners backed by high-court decision 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi & Sankei: 
Criteria for accepting pension claims: Bank accounts, household 
account books also to be used as evidence of payment 
 
Mainichi & Yomiuri: 
Tokyo High Court nixes Steel Partners' appeal over Bull-Dog's 
takeover defense; Bull-Dog to exercise takeover defense tomorrow 
 
Nikkei: 
Third-party pension panel sets criteria for accepting pension 
claims; Pension benefits likely to be paid to cases of "high 
probability of premium payment" 
 
Tokyo Shimbun: 
Poll on Upper House election: DPJ dominates both proportional 
representation blocs, electoral districts with disapproval rating 
for Abe cabinet topping 50 % 
 
Akahata: 
Nation groaning under heavy tax burden for past six years with a 
 
TOKYO 00003130  002 OF 010 
 
 
5-trillion yen tax increase involving general public and a 
4-trillion yen tax decrease toward big companies and wealthy people; 
Nonetheless, hiking the consumption tax planned 
 
2) EDITORIALS 
 
Asahi: 
(1) Aid to war-orphans: Don't disappoint them again 
(2) Manifestos should show numerical targets 
 
Mainichi: 
(1) Government should compensate war-orphans for past hardships 
(2) LDP, DPJ appear to dodge the question of hiking consumption 
tax: 
 
Yomiuri: 
(1) Aid to war-orphans: Political decision led to early settlement 
(2) Farm Minister Akagi's scandal: More detailed explanation 
essential 
 
Nikkei: 
(1) Constructive policy debate backed by financial resources needed 
(2) High court approves takeover defense 
 
Sankei: 
(1) More policy debate needed instead of talking about 
responsibility for election results 
(2) We welcome political decision to offer aid to war-orphans left 
behind in China 
 
Tokyo Shimbun: 
(1) Aid to war-orphans: We want to see them welcomed home 
(2) Defense white paper good study material for Defense Minister 
Koike 
 
Akahata: 
(1) 2007 defense white paper: Overseas military operations put in 
main duties without any restrictions 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, July 9 
 
NIKKEI (Page 2) (Full) 
July 10, 2007 
 
09:04 
Gave an interview at LDP headquarters. 
 
12:00 
Met LDP Secretary-General Nakagawa. 
 
14:13 
Met LDP Chief Deputy Secretary-General Motegi. 
 
15:38 
Met Chief Cabinet Secretary Shiozaki. 
 
16:54 
Met at the Kantei with Chairman Takeshi Noda and others of the 
project team for supporting the livelihood of Japanese orphans left 
behind in China in the closing days of WWII. 
 
TOKYO 00003130  003 OF 010 
 
 
 
17:55 
Had a haircut at a barbershop in the Hilton Tokyo. 
 
19:35 
Returned to his official residence 
 
4) Poll: DPJ ahead in proportional representation blocs, electoral 
districts; Cabinet disapproval rating over 50 % 
 
TOKYO (Top play) (Abridged) 
July 10, 2007 
 
Ahead of the upcoming House of Councillors election to be announced 
July 12, the Tokyo Shimbun conducted a telephone-based nationwide 
public opinion survey to probe public attitudes. In the survey, 
respondents were asked which political party or which political 
party's candidate they would vote for. In response to this question, 
32.4 % chose the leading opposition Democratic Party of Japan 
(Minshuto) for proportional representation, with the ruling Liberal 
Democratic Party at 26.8 % . For voting in electoral districts as 
well, the DPJ was above the LDP, with 31.4 % choosing the DPJ and 
27.3 % favoring the LDP. In addition, about 70 % were critical of 
Prime Minister Abe's handling of the pension issue and the 
politics-and-money issue. The figure shows that these issues have 
damaged the LDP. 
 
In 2005, the House of Representatives was dissolved for a general 
election over postal privatization. In the survey this time, 
respondents were asked which political party they voted for at that 
time in proportional representation. In response to this question, 
42.1 % answered that they voted for the LDP. Among them, about 20 % 
said they would vote for the DPJ both in their proportional 
representation blocs and in their electoral districts. The LDP has 
failed to retain many previous supporters. 
 
The last election for the House of Councillors was held in 2004. In 
that election as well, the DPJ garnered more votes than the LDP both 
in proportional representation and in electoral districts. The 
survey this time also posted a similar margin between the two 
parties. 
 
Meanwhile, respondents were also asked if they supported the Abe 
cabinet. To this question, "no" and "no to a certain degree" totaled 
53.4 % , with "yes" and "yes to a certain degree" adding up to 44.2 
% . The nonsupport rate was nearly 10 points higher than the support 
rate. 
 
In the survey, respondents were also asked about the prime 
minister's handling of the pension fiasco that was touched off by 
the government's failure to keep pension records for as many as 50 
million people. To this question, 67.8 % answered that they could 
not trust the premier's response. Abe has so far replaced three of 
his cabinet ministers over politics-and-money scandals and other 
issues in his nine months in office. Asked about this fact, 62.5 % 
answered that Abe has responsibility for his appointments of those 
cabinet ministers. As seen from these two figures, the public is 
turning a severe eye to Abe. 
 
In the breakdown of public support for political parties, however, 
the LDP stood at 39.9 % , with the DPJ at 21.2 % . The LDP is nearly 
20 points higher than the DPJ. Asked which political party or which 
 
TOKYO 00003130  004 OF 010 
 
 
political party's candidate to vote for in proportional 
representation blocs and electoral districts, more than 20 % 
answered that they "don't know." Depending on the future situation, 
the margin between the DPJ and the LDP could narrow. 
 
5) Poll: DPJ stands at 24 % in pre-election popularity rating, LDP 
at 17 % 
 
TOKYO (Page 2) (Full) 
July 10, 2007 
 
Kyodo News conducted a telephone-based nationwide public opinion 
survey on July 7-8 to probe trends in public attitudes toward the 
July 29 election for the House of Councillors. In the survey, 
respondents were asked which political party or which political 
party's candidate they would vote for under the proportional 
representation system. In response to this question, 24.6 % chose 
the leading opposition Democratic Party of Japan (Minshuto), up 0.1 
percentage point from the last survey conducted June 30 and July 1. 
The DPJ sustains its good showing. The ruling Liberal Democratic 
Party was at 17.6 % , down 0.3 point from the last survey. The 
margin between the two parties widened, though slightly. 
 
The approval rating for Prime Minister Shinzo Abe and his cabinet 
was 30.1 % , down 1.9 points from the last survey. The Abe cabinet's 
support rate renewed its all-time low since it came into office in 
September last year. The disapproval rating for the Abe cabinet hit 
an all-time low of 58.8 % , up 0.7 point. 
 
In popularity rating for electoral districts, the DPJ stood at 23.3 
% , up 0.4 point from the last survey. The LDP was at 19.8 % , up 
0.6 point. As seen from these figures, the DPJ has a lead over the 
LDP. 
 
For proportional representation, New Komeito, the LDP's coalition 
partner, scored 5.8 % , with the Social Democratic Party (Shaminto) 
at 2.4 % and the People's New Party (Kokumin Shinto) at 0.2 % . No 
respondents picked the New Party Nippon (Shinto Nippon). Those 
undecided accounted for 41.6 % . 
 
Polling methodology: The survey was conducted July 7-8 on a 
computer-aided random digit dialing (RDD) basis. Among randomly 
generated telephone numbers, those actually for household use with 
one or more eligible voters totaled 1,786. Answers were obtained 
from 1,256 persons. 
 
6) Poll: 72 % want tax reform as campaign issue 
 
ASAHI (Page 1) (Abridged) 
July 10, 2007 
 
An estimated 72 % of the nation's electorates want tax reform, 
including the consumption tax, to be a point of contention in 
campaigning for the upcoming House of Councillors election, with 
only 13 % saying they do not think that way, the Asahi Shimbun found 
from its recent telephone-based 9th serial public opinion survey 
conducted July 7-8. As seen from these figures, a majority of the 
nation's voting population think the political parties should 
manifest their standpoints about the tax system, including the 
consumption tax, in the run-up to the election. Respondents were 
also asked if they thought the consumption tax should be raised. In 
response to this question, 40 % answered "yes," with 51 % saying 
 
TOKYO 00003130  005 OF 010 
 
 
"no." 
 
The government and ruling coalition plan to carry out a drastic 
reform of the tax system, including the consumption tax, with an eye 
to fiscal 2007. The ruling camp, however, will not make a campaign 
issue of the tax system, as Prime Minister Abe has said specific 
discussions would not be started until after this fall. 
 
However, even among those who support the ruling Liberal Democratic 
Party, 67 % want the election to focus on the tax system. The 
proportion of those who want the tax system to become a campaign 
issue was 82 % among those who support the leading opposition 
Democratic Party of Japan (Minshuto) and 69 % among floating voters 
with no particular party affiliation. 
 
The proportion of those who want the tax system to become a campaign 
issue in the House of Councillors election was 79 % among men and 66 
% among women, while it was 13 % among men and also among women. 
Among those in their 20s to 60s, the proportion of those seeking to 
focus on the tax system was around 80 % . However, the figure was 49 
% among those aged 70 and over. 
 
7) Hill to arrive in Japan this weekend to pave way for six-party 
talks to occur next week 
 
YOMIURI (Page 2) (Full) 
July 10, 2007 
 
Final coordination is underway for US Assistant Secretary of State 
Christopher Hill, the US chief negotiator in the six-party talks on 
the North Korean nuclear issue, to visit Japan possibly this weekend 
to confer with his Japanese counterpart, Kenichiro Sasae, 
director-general of the Foreign Ministry's Asia and Oceanian Affairs 
Bureau, on a plan to hold a session of the chief negotiators from 
the six countries, one government official revealed yesterday. 
 
According to this official, following his visit to Japan, Hill plans 
to travel to South Korea and China and in South Korea to confer with 
South Korean chief negotiator Chun Young Woo, director of the Office 
of the Diplomatic Policy of South Korea's Ministry of Foreign 
Affairs and Trade and in China to hold talks with Chinese Vice 
Foreign Minister Wu Dawei. And staying in Beijing, Hill intends to 
get a session of the six-party chief negotiators to take place 
there. 
 
In this regard, Chinese Assistant Foreign Minister Cui Tiankai was 
asked by Japanese press corps at the Chinese Foreign Ministry 
yesterday about when to hold the next round of talks of the chief 
delegates from the six countries and said, "We have 20 or so days 
before early August. It is fully possible to hold a session. We will 
hold it once each country becomes ready." He thus revealed a strong 
possibility of holding the session by the end of the month. 
 
8) Foreign minister to set out on overseas trip on July 30, the day 
after Upper House election 
 
MAINICHI (Page 5) (Full) 
July 10, 2007 
 
Foreign Minister Taro Aso decided yesterday to visit the Philippines 
from July 30, the day after the House of Councillors election, 
through August 3. He will attend the foreign ministerial meeting of 
 
TOKYO 00003130  006 OF 010 
 
 
ASEAN+3 and a meeting of the ASEAN Regional Forum. 
 
Aso is expected to exchange views on economic partnerships with 
Southeast Asia, the situation on the Korean Peninsula, and other 
issues. Depending on future moves by North Korea, a foreign 
ministerial of the six-party talks might be held. 
 
Many observers anticipate an uphill battle for the ruling camp in 
the Upper House election on July 29. Prime Minister Shinzo Abe might 
be forced to resign if the ruling camp suffers a defeat. Foreign 
Minister Aso has been viewed as a possible successor. Attention is 
being focused on how his absence at such a crucial time will affect 
the political situation after the election. 
 
Coordination is also underway for Aso to make a round of visits to 
the Middle East and Latin America Aug. 12-25. But this trip may be 
aborted, depending on the election results. 
 
9) Poll: 77 % Japanese "negative" about mingling with foreign 
residents 
 
TOKYO SHIMBUN (Page 3) (Full) 
July 10, 2007 
 
In a survey conducted and revealed yesterday by the Ministry of 
Land, Infrastructure and Transport, 56 % of foreigners surveyed but 
only 10 % of Japanese respondents expressed eagerness about 
socializing between foreigners living in Japan and local residents. 
 
The survey was conducted from December of last year through early 
this January on residents in 16 areas in Ibaraki, Gunma, Tochigi, 
and Saitama, where a number of foreigners live. Replies were 
collected from 738 foreign households and 1,104 Japanese 
households. 
 
On nationality, Brazilians accounted for 49 % , followed by 
Peruvians with 14 % , Chinese with 12 % , and Vietnamese with 10 % . 
Their average length of stay in Japan was 8.7 years. 
 
Among the foreign respondents, 5 % said, "Mingling with Japanese is 
unnecessary," and 26 % said, "The minimum is enough in our lives." 
These negative replies made up 31 % . Persons eager to learn the 
Japanese language accounted for 87 % , and 73 % said they wanted to 
continue to live in the same area. 
 
Of the Japanese residents surveyed, 23 % said, "There is no need," 
and 54 % said, "The minimum is enough in our lives." These negative 
replies reached 77 % . 
 
The ministry cites "little opportunity for interchange with 
foreigners" as the main reason for Japanese residents' lack of 
eagerness to socialize with foreigners. It stresses the need for a 
system to promote interchange between foreigners and local 
residents. 
 
According to the ministry, the number of foreign residents was about 
2.085 million at the end of 2006, an increase of about 670,000, or 
47 % over the level in 1996. 
 
10) Abe remains tongue-tied on office expense issue 
 
TOKYO SHIMBUN (Page 2) (Excerpts) 
 
TOKYO 00003130  007 OF 010 
 
 
July 10, 2007 
 
Prime Minister Shinzo Abe remained inarticulate about the 
questionable bookkeeping of office expenses by Agriculture, Forestry 
and Fisheries Minister Norihiko Akagi, indicating that he would not 
urge the farm minister to produce receipts. Although Abe wants to 
demonstrate a resolute stance regarding the politics-and-money issue 
in order to dispel public distrust once and for all, he cannot do so 
because of two shackles. Whether or not he can quell public 
criticism before the July 29 House of Councillors election remains 
to be seen. 
 
The first shackle is that he allowed former Administrative Reform 
Minister Genichiro Sata, Education, Science and Technology Minister 
Bunmei Ibuki, and former MAFF Minister Toshikatsu Matsuoka, who 
committed suicide, to refuse to produce receipts when their massive 
office expenses came to light. 
 
As the grounds, all those lawmakers cited the unrevised Political 
Funds Control Law that did not obligate political organizations to 
attach receipts to their financial statements, including office 
expenses. 
 
Opposition parties demanded the production of receipts, but the 
cabinet ministers consistently refused to do so. Abe did not press 
them to, either. 
 
Pressuring Akagi for receipts might reignite the issue of the 
questionable office expenses of Matsuoka and others. 
 
In yesterday's press interview, Abe reiterated that there was no 
need to produce receipts, saying, "(Mr. Akagi) explained his office 
expenses quite precisely." 
 
Another shackle is that the revised Political Funds Control Law that 
cleared the Diet in the previous session requires fund-management 
organizations to attach receipts to their fund reports for every 
item costing 50,000 or more. 
 
11) Minshuto beefing up pursuit on Akagi over political funds 
scandal 
 
NIKKEI (Page 2) (Full) 
July 10, 2007 
 
In criticizing Agriculture, Forestry and Fisheries Minister Norihiko 
Akagi over a political funds scandal, Democratic Party of Japan 
(Minshuto) President Ichiro Ozawa said in a press briefing 
yesterday: "It is irrational for him to insist that there was no 
fictitious accounting of costs but say that he cannot explain." 
Akagi's political organization has registered the home of his 
parents as its office but has recorded in its political funds 
reports huge amounts of money as office expenses. 
 
Meanwhile, Akagi told reporters after a meeting at the Prime 
Minister's Official Resident last night: "We have properly reported 
and publicized a total amount of expenses incurred. There should be 
no problem since there has been no fictitious booking of costs." He 
indicated he would not disclose receipts. He also stated that he 
would give a detailed explanation in a press briefing after a 
cabinet meeting today. 
 
 
TOKYO 00003130  008 OF 010 
 
 
In a press conference yesterday, Minshuto Policy Research Council 
Chairman Takeaki Matsumoto cited the revised Political Funds Control 
Law (proposed by the ruling camp), which was adopted in the latest 
ordinary Diet session: "Only political funds management 
organizations are targeted under the law. But this (Akagi) case has 
exposed that there is a problem with this," indicating he would make 
this problem central in the House of Councillors election campaign. 
 
Prime Minister Abe emphasized last evening: "The revised law was 
enacted after thorough debate in the ruling camp." Asked about the 
possibility of another revision of the law, though, Abe replied: "If 
necessary, such discussion should be conducted." 
 
12) Minshuto manifesto features Ozawa in last battle 
 
ASAHI (Page 4) (Abridged slightly) 
July 10, 2007 
 
The major opposition Minshuto (Democratic Party of Japan) unveiled 
yesterday its manifesto (campaign pledges) for the upcoming House of 
Councillors election, carrying four pages of pictures of Ichiro 
Ozawa, its president. The manifesto is apparently aimed at featuring 
the "last battle" of Ozawa, who had declared that he would retire 
from politics if the opposition camp failed to win a majority in the 
upcoming election. 
 
The 32-page manifesto that begins with a close-up of Ozawa's face 
spells out "three promises" of pension, child-rearing, and 
agriculture, and seven major proposals on employment, 
decentralization, and other matters. It also plays up Ozawa's 
visions, such as that people's livelihood should come first and that 
a two party-system should be installed. The manifesto also contains 
a picture-studded section on Ichiro Ozawa, explaining his background 
from the assumption of office as Liberal Democratic Party secretary 
general at age 47, the establishment of the Hosokawa administration 
after leaving the LDP, formation of the New Frontier Party and the 
Liberal Party, to current position as Minshuto president. This is 
the first Minshuto manifesto that has carried so many photos and 
detailed information on the background of its party. 
 
Three promises 
 
¶1. The government will receive pension benefits in full in a 
responsible manner. 
¶2. The party will introduce a child-rearing allowance system to pay 
26,000 yen for each child. 
¶3. The party will establish an income compensation system to cover 
every farmer. 
 
Seven proposals 
 
¶1. Ensure employment to rectify national socioeconomic disparities. 
¶2. Eliminate a lack of doctors to create a solid medical system. 
¶3. Eliminate wasteful administrative spending. 
¶4. Realize decentralization. 
¶5. Revitalize medium and small companies in order to breathe new 
life into the Japanese economy. 
¶6. Japan will play a leading role in the global environment. 
¶7. Achieve proactive diplomacy. 
 
13) Pension benefits may be paid without data, according to judgment 
standards for cases of missing records; third-party committee does 
 
TOKYO 00003130  009 OF 010 
 
 
not specify penalty for false claims 
 
TOKYO SHIMBUN (Page 1) (Excerpts) 
July 10, 2007 
 
Following pension premium payment record-keeping errors caused by 
the Social Insurance Agency (SIA), the Ministry of Internal Affairs 
and Communications has set up a Central Third-Party Committee to 
Confirm Pension Premium Payment Records, a panel that will determine 
whether to pay pension benefits to claimants who have no documents 
that prove their premium payments, such as receipts. The panel 
yesterday adopted basic guidelines for decisions and indicated 
expected cases in which benefits can be paid. A feature of the 
guidelines is to allow correction of pension amounts in cases in 
which premium payments can be inferred from claimants' bank books 
and household records. Even if there is no such data at all, if a 
request to correct pension amounts is apparently not unreasonable 
and seems reliable to a certain extent, payments will be generally 
approved. 
 
 
Guidelines lack certainty 
 
(Commentary) The panel yesterday adopted judgment guidelines, under 
which pension benefit payments will be approved even if there is no 
evidence proving premium payment, if requests for correction of 
pension amounts "appear reasonable to a certain degree." Behind the 
decision is the government's intention to head off discontent by 
indicating the possibility of widely paying benefits. 
 
The guidelines do not place absolute value in SIA pension records, 
which may be good news for contributors with no payment data. 
However, since the job of judging the propriety of paying benefits 
will be left to screeners, the possibility of arbitrary decisions 
has not been completely ruled out. 
 
14) Steel Partners an "abuser" of M&As: Tokyo High Court declares 
Bull-Dog Sauce defense measures legal 
 
YOMIURI (Top Play) (Excerpts) 
July 10, 2007 
 
In an appeal filed by Steel Partners Japan Strategic Fund, a US 
investment fund, seeking an injunction barring Bull-Dog Sauce Co., 
the largest sauce maker in Japan, from implementing a takeover 
defense measure, the Tokyo High Court yesterday rejected its request 
and decided that the defense measure is legal. The court identified 
Steel Partners as an "abuser" of M&As that would destroy corporate 
value and judged that the sauce maker's defense measure is 
legitimate. It also said that the idea of taking into account only 
the profits of shareholders is unacceptable. 
 
High court warns against only pursuing profit 
 
The decision by the Tokyo High Court will likely have a major impact 
on M&As. The court made two noteworthy assertions. 
 
First, concerning the question of to whom a company belongs, the 
court pointed out: "The idea of solely pursuing stockholders' 
profits has its limitations and is therefore unacceptable." It thus 
made its decision clear to curb the move of takeover bidders 
excessively brandishing stockholders' rights, such as Livedoor and 
 
TOKYO 00003130  010 OF 010 
 
 
Murakami Fund did. 
 
A joint-stock corporation is owned by shareholders, but the company 
cannot be managed without support from employees, business partners, 
and consumers. The court decision noted that companies should 
enhance corporate value, while taking into consideration their 
inseparable relations with various stakeholders and confirmed that 
perception from a judicial standpoint. 
 
Second, the court pointed out the dichotomy that occurs when 
investment funds carry out M&As. 
 
It noted that Steel Partners is pursuing its own profits instead of 
the management of the targeted company, describing it as a company 
that is responsible for giving priority to customer benefits due to 
its organizational nature as an investment fund. It then described 
the fund as "abuser" of M&As based on its analysis of its past M&A 
activities. 
 
The court decision, of course, does not say that all investment 
funds are abusers of M&As. However, investment funds will be held 
accountable more severely in the future regarding how they intend to 
improve the management of targeted companies. 
 
SCHIEFFER