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27 Law Japan 27 (2001)
T. Boone Pickens and Corporate Governance in Japan: A Retrospective View of Three Sides of the Story and Recent Developments

handle is hein.journals/lij27 and id is 37 raw text is: VOLUME 27:27, 2001

T. Boone Pickens and Corporate Governance
in Japan: A Retrospective View of Three Sides of
the Story and Recent Developments
PAULINE C. REICH
I. Introduction
It is often said that there are three sides to a story: my side, your side, and the
truth. Eight years ago, an incident arose in Japan in which T. Boone Pickens, an
American investor, attempted to gain seats on the board of directors of Koito
Manufacturing Company, a member of the same keiretsu as Toyota. The company
was an industry leader in automotive lighting. It had a debt-free balance sheet
and an established track record of successful products. Its stock sold at a hefty 210
times earnings. Most of its sales were in Japan, with Toyota accounting for 45% of
its revenues.'
When rebuffed by the Japanese company, Pickens did what works in the
United States: he obtained maximum press coverage, filed a lawsuit in Japan and
filed complaints with various American administrative and legislative bodies.
What works in the U.S. didn't work in Japan, however, and ultimately, he folded
his tent and gave up on Japan. After his defeat, he returned to the United States to
give testimony to Congress, citing Japan's keiretsu system as one reason for his
downfall. Among the allegations was one that Toyota, as the keiretsu parent,
dictates the pricing policies of Koito, and as a result Toyota obtains preferred
prices. This system gives Toyota hidden dividends, to the exclusion of the other
shareholders. As Koito's largest shareholder, this is where I become directly
involved.2 In that way, Pickens continued to carry on a battle begun in court in
Japan in U.S. government circles. He had previously presented himself in the
United States as the champion of the rights of small shareholders by challenging
America's fat-cat management class. While on the surface it appeared that his
challenge to corporate Japan was more of the same healthy American desire to
Notes: Ms. Pauline C. Reich is Associate Professor, Waseda University School of Law, Tokyo and a
member of the bar of the State of New jersey, U.S.A. The author is currently Vice Chair of the
International Legal Education Committee of the American Bar Association Section of International
Law and Practice and Chair of the Asia Pacific Subcommittee of the American Bar Association
Section of Dispute Resolution. She acknowledges the assistance of Associate Dean Kawabe, Waseda
University School of Commerce and students Masayo Terakado and Shin Okubo in developing the
chronology of events described herein.
'Mark Ivey and Ted Holden, Boone Pickens, Samurai Warrior, BUSINESS WEEK 94 (May 8, 1989).
2Testimony of T. Boone Pickens, House of Representatives, Subcommittee on Economic and
Commercial Law, Committee on the Judiciary, May 3, 1990 alleging that Japanese companies were
violating U.S. antitrust principles, and that the Japanese corporate system rewards incumbent
managers and related customers rather than shareholders, as seen in the relationship between Koito
and Toyota.

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