Nippon Meat founder forced out


Nippon Meat's outgoing president, Hiroji Okoso, is the son of company founder and chairman Yoshinori Okoso

Staff and reports

TOKYO, Japan -- Embattled meat processor Nippon Meat Packers has announced that its chairman and founder, Yoshinori Okoso, and two vice chairmen will retire on Wednesday.

Shigeo Suzuki and Teruchika Okoso will join the chairman in stepping down, to take responsibility for a beef-mislabeling scandal.

That reversed an earlier decision that they would take honorary posts with the company. Nippon Meat hopes that will appease Japan's Agriculture Ministry, which said the initial measures were unacceptable.

The ministry said on Monday it will conduct more inspections, scrutinizing all packages of beef still held by subsidiary Nippon Foods Inc.

The government will not lift a suspension of the company's operations until the end of the investigation, likely at the end of this week or the start of next week.

Government criticism forced U-turn

The company was forced in early August to admit it had mislabeled beef from other countries, to take advantage of a buyback program for the beef industry after the discovery of mad-cow disease in Japan.

Nippon Meat announced just last week that Okoso and two vice-chairmen would be shifted into honorary positions.

But criticism from Agriculture Minister Tsutomo Takabe, who claimed the move was "difficult to understand," forced the company to change its plans and push all three men into retirement on Wednesday.

President Hiroji Okoso, son of founder Yoshinori Okoso, will also leave his post in the wake of the scandal, taking up a lesser position as senior managing director.

Hiroji Okoso absolved himself of blame for the fraud, but he was forced to step down after more instances of illegal mislabeling were uncovered.

Corporate reorganization denied


Japan's beef industry is reeling from an outbreak of mad cow disease

A Nippon Meat spokesman on Tuesday denied a report from the Nihon Keizai Shimbun business daily that the company is considering a shift to a holding-company structure.

That would have seen it spin off the ham, sausage, processed-product and beef divisions.

"We are absolutely not considering such a plan," a Nippon Meat spokeswoman told Reuters news agency.

The Nikkei said the company was making the move the to rebuild the shattered reputation of the Nippon Meat brand, once the market leader in Japan.

The agriculture ministry reported its findings on Monday, stating that the Ehime office had passed off eight times as much beef as initially reported.

The government also found that the Himeji office submitted rotten beef that was due for disposal to the buyback program.

Sharp fall in market share

At the beginning of August, Nippon Meat -- better known in Japan as Nippon Ham -- held a 30 percent share of the Japanese market in ham, sausage and other meat products.

Since the scandal broke and stores started pulling products off shelves, its market share plummeted below 10 percent.

The company was able to ride out previous downturns in the beef industry because it was able to price its products higher than competitors.

But analysts say it will now have to slash prices in order to win back customers.

They predict it will record a group operating loss of around 2 billion yen ($16.8 million) for the year -- compared to a profit of 38.4 billion yen ($322.7 million) for the previous year.

Shares in Nippon Meat were down nearly 4 percent to 999 yen in early afternoon trading on the Tokyo Stock Exchange.