¥13 trillion: Exorbitantly unrealistic compensation demanded of 4 individuals

Editorial

13:03 JST, July 15, 2022

Former executives of Tokyo Electric Power Company Holdings Inc. have been ordered to pay a huge amount of compensation — more than ¥13 trillion. It is possible that the court ruling, ordering an amount of money that is absolutely impossible for an individual to pay, calls the very meaning of the trial into question.

In a shareholder derivative lawsuit, in which 48 individual shareholders demanded ¥22 trillion in damages from former TEPCO management personnel for causing damage to the utility firm through the 2011 accident at the Fukushima No. 1 nuclear power plant, the Tokyo District Court handed down a ruling ordering the four former executives to pay the company a total of ¥13.321 trillion.

The ruling said the former executives “could have foreseen the arrival of a huge tsunami, but did not instruct that measures be taken to prevent the accident.” The amount to be paid in this case was calculated based on damages the company had to pay to affected people, plus decommissioning and decontamination costs, among others, according to the ruling.

A shareholder derivative lawsuit is a system in which shareholders seek compensation on behalf of a company from board directors and other management personnel who have caused damage to the company. The ruling this time may have been based on the belief that power companies have an obligation to prevent serious accidents at nuclear power plants, and that the management should ultimately bear the responsibility.

However, there are some points that are hard to understand. Last month, the Supreme Court handed down a ruling that covered four class-action civil lawsuits in which evacuees and others sought damages from the government. The ruling said that the scale of the tsunami was much greater than estimated and thus the accident could not have been prevented.

The new district court ruling runs counter to that top court ruling. Is it even comprehensible that the district court’s decision is the exact opposite of the Supreme Court’s?

In addition, in a criminal trial in which three of the defendants in the latest case faced mandatory indictment on charges of professional negligence resulting in death over the nuclear accident, the Tokyo District Court found the three not guilty, saying that it had been difficult for them to predict the tsunami. Although criminal and civil trials are different, this disparate outcome is also difficult to understand.

There may have been many people who were surprised at the astronomical amount of compensation ordered. It is practically impossible for four people to cover an amount more than twice as big as Japan’s national defense budget.

Nuclear power generation has been promoted as national policy. Although TEPCO holds a heavy responsibility for the accident, is it appropriate to put aside the responsibility of the central government and place all the blame on the four individuals?

In lawsuits filed by shareholders in the past, huge amounts of compensation have been ordered.

Former Olympus Corp. executives, including a former chairman, were ordered to pay ¥59.4 billion in damages to the major optical and electronic device maker over their past cover-up of huge losses. At Duskin Co., former executives were ordered to pay ¥5.3 billion in compensation over a scandal involving food safety, and they later declared personal bankruptcy.

In most cases, however, former executives were involved in wrongdoing or covered up scandals. The latest case is extremely unusual in that the appropriateness of natural disaster preparedness was a major point of contention at court.

Some say that if there is a string of court cases like this one, no one will want to become a company director. There is also concern that other electric power companies could atrophy as they become reluctant to operate nuclear power plants.

(From The Yomiuri Shimbun, July 15, 2022)