It’s time for Japan to punish Tepco

Fishermen trawling the waters off Japan’s eastern coast have been alleging for a while that radioactive water was again spilling into the Pacific from the Fukushima power plant that melted down after a massive earthquake in 2011. On Feb. 24, Tokyo Electric Power (Tepco), which is responsible for the site, admitted those suspicions were justified. And it turns out that Tepco knew about this latest radioactive leak since last May - and the giant utility said nothing for almost a year.

In the 15 days since Tepco finally confessed, have investigators raided its Tokyo headquarters? Have regulators demanded that heads roll? Has Prime Minister Shinzo Abe used his bully pulpit to demand accountability from the company that gave the world its worst nuclear crisis since Chernobyl? In any other major democracy, those steps would have been obvious. But none have occurred in Japan. And that raises troubling questions not just about Tepco’s corporate governance, but the rampant cronyism enabling it.

When he took office in December 2012, Abe pledged to make corporate executives more accountable to international codes of conduct. In August 2013, he had a perfect chance to show his mettle. At the time, Tepco was still the butt of international criticism for its handling of the aftermath at Fukushima. Abe - concerned that the bad press would affect Tokyo’s campaign to host the 2020 Olympics - declared his government would push Tepco aside and handle the cleanup efforts directly.

It was all for show. Abe’s government never intervened, and Tepco stayed in charge. Four years to the day since the earthquake, Fukushima is still leaking; 120,000 people remain displaced; and Tepco’s opacity and incompetence are unchanged. The company’s obfuscations “tell us all we need to know about its resilient corporate culture of irresponsibility,” says Jeff Kingston, director of Asian Studies at Temple University in Tokyo. “It has not changed its stripes. The decommissioning efforts have been shambolic, it’s still incompetent and negligent and has a very deep hole to climb out of in trying to regain any public trust.”

How does Tepco get away with it? It’s protected from on high by the “nuclear village,” Tokyo’s answer to the military-industrial complex that is said to hold sway in Washington. This alliance of pro-nuclear politicians, bureaucrats and power companies promotes reactors over safer forms of energy like solar, wind or geothermal, and works to shield utilities from competition and global standards. (That’s how Tepco got away with consistently doctoring its maintenance reports for Fukushima and putting all of its backup generators underground in a tsunami-prone area.) Even after the Fukushima disaster, national nuclear regulators seemed more concerned about restarting Japan’s 48 remaining reactors (all of which have been shut down in the interim) than neutralizing the one contaminating the northeast of the country.

Tokyo was a scary place to be in March 2011 amid Fukushima’s triple meltdown. Most frightening, though, was the utter lack of transparency from the authorities. Tepco’s then-president, Masataka Shimizu, gave maddeningly contradictory accounts of events at Fukushima. Two months later, Shimizu took the fall for Tepco sending radiation clouds Tokyo’s way. Tepco’s idea of a new start was to replace him with a 36-year company veteran. Four years on, it’s still an open question whether Tepco, or the economy that spawned it, has learned anything.

“I find it galling that not only was Tepco never punished for constructing reactors well below the tsunami warning markers, thereby worsening the effects of the quake and tidal wave, but was even allowed to raise its rates to make the consumer pay for the cleanup costs,” says Robert Whiting, author of “Tokyo Underworld.”

Even in the context of Japanese cronyism, it’s astounding that nobody at Tepco has gone to jail. Criminal proceedings against Japan’s business titans aren’t unprecedented. Executives of the optics manufacturer Olympus were arrested over a 2011 fraud scandal. Internet entrepreneur Takafumi Horie and well-known fund manager Yoshiaki Murakami got locked up for insider trading. But Tepco’s executives continue to enjoy a get-out-jail-free card, courtesy of the Tokyo establishment.

At the very least, Tepco’s senior management should be fired without pensions and face charges from prosecutors. The company should also be nationalized. (Taxpayers are bearing the costs of Tepco’s negligence anyway.)

Abe’s desire to eliminate the cronyism endemic to Japan Inc. is laudable. It would make the economy more productive vibrant, productive and attractive to overseas investors. He should start by bringing the most egregious offender to justice. I’m sure the Fukushima fishermen will be happy to testify.

*The author is a Bloomberg View columnist based in Tokyo and writes on economics, markets and politics throughout the Asia-Pacific region.

By William Pesek