TEPCO's Chairman and President to Resign As TEPCO Is Being Effectively "Nationalized"

a la GM and AIG. Nothing new under the sun.

Chairman Katsumata and President Nishizawa will resign as the money from the government (to be collected ultimately from taxpayers of course) flows in to support TEPCO's operations to the tune of 2 trillion yen (US$25 billion).

From Fukushima Minpo (12/22/2011):

東京電力と原子力損害賠償支援機構は２２日、公的資金による資本注入を受けるため、経営陣を刷新する方向で検討に入った。今年６月に就任した西沢俊夫社長のほか、勝俣恒久会長ら福島第１原発事故の発生時に代表権を持っていた経営陣はすべて辞任する見通しだ。勝俣会長の後任は外部から招く予定。新社長については内部昇格で調整している。

TEPCO and the Nuclear Damage Liability Facilitation Fund [set up by the national government] started discussion on December 22 to reshuffle the top management in order to receive the public fund. It is likely that all directors with representation right when the Fukushima I Nuclear Plant accident happened will resign, including President Toshio Nishizawa, who became the president in June, and Chairman Tsunehisa Katsumata. The new chairman will be selected from outside the company, while the new president is likely to be promoted to the position from within.

　資本注入の前提として、東電と政府が設立した支援機構は経営責任の明確化が必要と判断した。新しい経営体制をめぐっては、現在１人しかいない社外取締役の比率を高め、経営の監視を強める方針だ。

TEPCO and the Fund, which was set up by the government, have decided that it is necessary to clarify accountability. In the new management, more outside directors will be elected to the board which has only one such director right now so that they keep a keen eye on the operation of the company.

Blah blah blah.

Fat retirement package and fat pension, and descend to affiliated companies or research institutes as executives or as consultants - that's my guess.

The Nuclear Damage Liability Facilitation Fund is funded by the government (7 billion yen) and the electric power companies that operate nuclear power plants in Japan (7 billion yen).

According to Asahi Shinbun (12/21/2011) and others, the national government will ask 70 financial institutions to lend the total of 1 trillion yen to TEPCO. The government will ask these institutions to lend another 1 trillion yen to the Nuclear Damage Liability Facilitation Fund with the national government's guarantee. The Fund will funnel that money to TEPCO, and in return will acquire more than two-thirds of the company by acquiring special class of stock to be issued, so that it will be easier for the Fund to later sell the shares in the future.

Why? Because it has become more apparent that the liabilities will exceed net assets at TEPCO soon.

This looks so familiar that I feel like I'm back in 2008.

Banks are happy, as the loans to TEPCO will be guaranteed by the national government - i.e. backstopped by the taxpayers. Bond holders are happy, as there will no headshave. Shareholders are happy because common stocks are not diluted, and the company will not go bankrupt if it is "nationalized".

TEPCO's corporate bonds are held widely by institutional investors as they have been considered safe, issued by a solid, profitable company, TEPCO. Not any more, but the large institutional investors, including Japan's Pension Fund, cannot suffer, can they?

TEPCO denies it is a "nationalization", but if it squawks like a duck and walks like a duck it is a duck. As if to celebrate the joyous occasion that it will be all paid by the Japan's current and future taxpayers, TEPCO has announced the increase in utility rates for both businesses and individuals.

So the Japanese people will be made to pay in multiple ways for TEPCO and the government: rate increase, increased cost of goods because of higher utility cost for the businesses, tax, and endless tax for decades to decommission the reactors and to decontaminate the highly contaminated Fukushima Prefecture.

TEPCO says "Please understand the difficult situation we're in" on their Japanese homepage. How about TEPCO understanding the difficult situation it has put the Japanese people in?

And just like the mortgage fraud and foreclosuregate, no one has gone to jail.

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