kindly answer question 1, 2 & 3 in the case study

Case study Daiichi Case study 6 Tokyo Electric Power and the disaster at Fukushima In an unlikely outburst, Naoto Kan, Japanese Prime Minister, shouted 'What the hell is going on?" to executives of the Tokyo Electric Power Company (TEPCO) following Japan's worst nuclear crisis at the Fukushima Daiichi nuclear power plant, after the tsunami and earthquake on 11 March 2011. Were the directors or the corporate governance systems and procedures at fault? The company appeared to have a commitment to sound corporate governance. As it stated on its website: At TEPCO, we have developed corporate governance policies and practices as one of the primary management issues for ensuring sustainable growth in our business and long-term shareholder value. We believe in strengthening mutual trust through interactive communication with our valued stakeholders, including shareholders and investors, customers, local communities, suppliers, employees and the public, so we can move forward toward solid future growth and development. Therefore, TEPCO considers enhancing corporate governance a critical task for management and is working to develop organizational structures and policies for legal and ethical compliance, appropriate and prompt decision-making, effective and efficient business practices, and auditing and supervisory functions. The TEPCO website explains the company's corporate governance processes. The Board of Directors currently comprises 20 directors, including 2 outside directors. Also, TEPCO has 7 auditors, including 4 outside auditors. The Board of Directors generally meets once a month and holds additional special meetings as necessary. Based on interactive discussion with objective outside directors, the Board establishes and promotes TEPCO's business and oversees its directors' performance. TEPCO has also established the Board of Managing Directors, which meets once a week, and other formal bodies to implement efficient corporate management through appropriate and rapid decision-making on key management issues. In particular, we have established internal committees to deliberate, adjust, and plan the direction of the whole Company across a range of key management concerns, including internal control, CSR, and system security, as well as stable electricity supply. For more appropriate and quicker decision-making, TEPCO also has the Managing Directors Meeting generally held once a week and other formal bodies to implement key corporate management issues efficiently, including those to be discussed by the Board of Directors. In particular, the Board has inter-organizational committees such as the Internal Control Committee, CSR Committee, System Security Measures Committee, and Supply and Demand Measures Conference to discuss directions of key management issues intensively across the entire company. But behind the reassuring corporate governance explanations on the TEPCO website lay a different reality. The company's opaque handling of the situation at the stricken plant was widely criticized. The extent of the danger was minimized and the full extent of the damage only gradually became apparent, as the risk severity level was gradually increased to rank alongside Chernobyl as a most severe nuclear accident. The company's handling of the incident exposed failings in its risk management systems. The company had a history of safety violations: in 2002, it had falsified safety test records, and in 2007, following an earthquake, its Niigata nuclear plant had a fire and a leak of radioactive water, which were concealed. In fact, the board was dominated by inside directors, qualified by their seniority within the company. Out of the 20 directors, 18 were insiders, while of the two nominally outside directors,58% 1 12:56 PRINCIPLES U BARONRED one of them, Tomijirou Morita, was chairman of Dai-Ichi Life Insurance, which was connected financially with TEPCO. In 2008, Tsunehisa Katsumata, the company president at the time of the 2007 problem, was elevated to chairman, being replaced by Masataka Shimizu, another career-long TEPCO employee. TEPCO had never appointed a head from outside the company. The company held its AGM on 23 June 2011 and faced withering criticism from shareholders. The president Masataka Shimizu apologized for the 1.25 trillion yen (US$ 15 billion) loss. But a motion to cease generating nuclear power was defeated with the support of institutional investors. Also in June 2011, the Japanese government appointed a five-man team to look into the company's finances. This committee was forced on the TEPCO board as a condition of financial support from the government to compensate those affected by the crisis at the Fukushima plant. Three years after the earthquake and tsunami damage to the TEPCO atomic plant the situation had worsened. The company was accused of being slow to respond to the radiation crisis. Fuel rods from the damaged reactor were cooled in water held in make-shift metal tanks that were bolted rather than welded together. Leaks were sealed with tape. In September 2013, water from the tanks leaked into the sea. Radiation levels 18 times above the safe level were detected, levels that would kill anyone exposed within hours. Neighbouring countries complained at the contamination of their seas. The Japanese economy was also affected. Following the Fukushima disaster, most other nuclear reactors in Japan were shut down under public pressure. But rising oil prices and the falling value of the yen meant that the alternative energy sources were becoming unsustainable. The government wanted to restart the other reactors, but the public were hostile. Japan is prone to earthquakes and many of these generators were built close to fault lines. But business interests pressed hard for the nuclear plants to reopen and energy costs to be stabilized. In November 2013, the most hazardous part of the Fukushima shut-down began. The fuel rods had to be moved from their unstable storage tanks to safety. Normally removing spent rods is a routine process. But these rods were not spent. The storage pool could boil dry and without coolant fuel rods would ignite or even explode. Mistrust in TEPCO reached an all time high. See www.facebook.com/OfficialTEPCOen, www.google.co.uk/finance?cid=669782 Discussion questions 1. Did the structure of the board contribute to the failures? 2. How do you account for the discrepancies between the company's alleged concern for corporate governance on its website and the catastrophic failure? 3. What advice would you give to the chairman of TEPCO? References and further reading Accounting Standards Steering Committee (1975) The Batra, Sumant, Kesar Dass and Associates (2008) India: Corporate Report: A Discussion Paper Published for National Experience with Managing Related-party Comment. Institute of Chartered Accountants in Transactions. The 2008 Asian Round Table on England and Wales, Moorgate Place, London. Corporate Governance, OECD, Hong Kong. Aoki, Masahiko, Gregory Jackson and Hideaki Miyajima Filatotchev, I. and M. Wright (eds) (2005), Corporate (2007) Corporate Governance in Japan: Institutional Governance Life Cycle. Elgar, London. Change and Organizational Diversity. Oxford University Press, New York. Hesterly, William S., Julia Liebeskind, and Todd R. Zenger (1990) 'Organizational Economics: An Impending O