TOKYO (Reuters) - The head of the state-backed $18 billion Japan Investment Corp (JIC), Masaaki Tanaka, said on Monday he and eight other board members would resign citing distrust of the trade ministry after a dispute over their pay.
The resignations throw into turmoil the public-private fund launched only three months ago with 2 trillion yen ($18 billion) of government money to help boost innovation among Japanese companies.
An official at the Ministry of Economy, Trade and Industry, which oversees the JIC, last week criticized what it sees as excessive pay demands by Tanaka and other top management and said trust between the ministry and the JIC had been damaged.
The dispute highlights the difference in perceptions between the JIC and the government over the fund’s mission. The JIC wanted to make aggressive investments, as global private equity firms such as KKR & Co (KKR.N) and Bain Capital would do.
Tanaka told a media briefing on Monday that he had never demanded the pay that the ministry said was too high, and the amount was originally proposed by the ministry.
“I am resigning because my trust with the ministry has been damaged,” said Tanaka, a former deputy president of Mitsubishi UFJ Financial Group Inc (8306.T).
“I wanted to use my expertise of finance and investment for Japan and wanted to contribute for the country. None of us joined JIC for the money.”
JIC was seeking annual compensation of about 55 million yen ($480,000) for Tanaka and other top management, a ministry official said last week.
That was higher than the Bank of Japan governor’s 35.3 million yen and the 31.5 million yen paid to the president of the Government Pension Investment Fund (GPIF).
Compensation at JIC would be lower than that at private equity firms which pay top executives as much as 90 million yen, Tanaka said.
The JIC was set up in September to take over the Innovation Network Corporation of Japan (INCJ), which was aimed at providing cash to boost innovation.
But it was better known for rescuing companies, such as the once cash-strapped chip maker Renesas Electronics Corp (6723.T), and for combining the liquid crystal display businesses of Hitachi Ltd (6501.T), Toshiba Corp (6502.T) and Sony Corp (6758.T).
Tanaka said in October JIC wanted to team up with global private equity firms to invest in Japanese firms.
(This version of the story corrects typographical error in the first paragraph)
Reporting by Junko Fujita; Editing by Chang-Ran Kim, Robert Birsel