Let's Japan.org Debunking Eikaiwa and Ramblings in Japan

Comedy gold!

Page launched an unfair dismissal claim against GEOS, which comes under the umbrella of the GEOS Corporation founded by Japanese businessman Tsuneo Kusunoki.

But the company responded by claiming that Page "accepted understanding of the 'Japanese way' of doing business". They went on to say he was used to Kusunoki "ranting", "berating" and "humiliating" people "so this was nothing new".

But the Employment Relations Authority said the company's failings were "fundamental and profound".

"Ranting," "berating," "humiliating," "nothing new." Man loses job because he didn't make enough money for the company, so GEOS counters with he was used to abusive behavior so that makes it OK. That's so pathetic it's laughable. One of the biggest failures of the large schools is their inability to properly educate, inform, and train their employees. Orientation generally consists of lots of don'ts--don't bother the manager, don't be late, don't cause trouble. Just show up and teach. Despite the instructors being the product the schools are selling, they are treated with contempt and expected to obey without question orders from head office. Instructors may be employees, but they are transient ones, whose only use to help line the pockets of the school they work for.

This dispute in New Zealand gets to the heart of the shake up in eikaiwa: the rot in management. There are two things that have characterized eikaiwa for a long time. One is the bicycle business model where the company must keep pedaling (collecting revenue) or else it will fall over. It worked for Nova and GEOS, but the moment that cash flow is interrupted, things go downhill very quickly. Then there are the autocratic owner/presidents. With Nozomu Sahashi, there was his plush penthouse-cum-office that would make Hugh Heffner jealous, plus his continued assertions that he did nothing wrong when he pilfered an employee. Kusunoki was more of the same, constantly demanding more and more from his staff and berating them for not meeting their monthly targets. When GEOS' Australia schools closed, he issued a half-assed apology that the closures there wouldn't affect operations in Japan. GEOS went bankrupt shortly after that announcement.

To use "the Japanese way" as an excuse just discredits eikaiwa even more. Dishonesty and bullying are the Japanese way? No wonder the major schools are in trouble. They can't fail fast enough. The major eikaiwas have never been about learning a language; they've always been about making money for their owners.

Japan Today has started a regular series on the state of the language school industry, in particular eikaiwa, written by Dean Rogers, president and CEO of Dean Morgan Co Ltd, the school that sounds like an investment company.

The first installment is an introduction laying out the ground to be covered, so there's not much meat in the article to talk about. However, I want to comment on the teacher statistics he uses. He talks about there being tens of thousands of English teachers in Japan. Fortunately, Adamu at Mutant Frog has done some research and found that the number of language instructors in Japan at the end of the 2008 was around 9,500. This is for all languages being taught in Japan, not just eikaiwa. If you factor in JETs, the number jumps to more than 10 thousand, but not tens of thousands.

If you're a regular reader of LJ, then you know that teaching English in Japan has been in the dumps for quite some time and is still in decline. The prospects for eikaiwa don't look bright when you factor in falling wages for instructors and lack of job security, the industry's tarnished image largely due to, but not limited to, the fallout from Nova's bankruptcy (lack of consumer confidence), an aging population (a shrinking customer base), and economic recession (less consumer spending and lower tax receipts putting the squeeze on local governments hiring instructors).

The series sounds promising though, so here's hoping that Dean makes the most of his columns.

Let's start an open thread for kicks. I won't call it an End of GEOS thread, but if you have have something to add, comment on it here.

Today is also notable as it marks two years since Nova went bankrupt. Although Nova is a shell of its former self, it's collapse has left its mark on eikaiwa. The final chapter has yet to be written as Sahashi appeals his conviction while trying to avoid hotel visits from gangsters.

What's on your mind?

A quick blurb in the newspaper, the Mainichi reports that the three men arrested on suspicion of confining Sahashi in his hotel room have been released.

Apparently the police don't have much of a case on them. At any rate, the thugs caught with Sahashi are probably thinking, "Mission accomplished." They delivered their message.

Mainichi article

ＮＯＶＡ元社長事件：監禁容疑で逮捕の３人釈放　東京地検　

東京地検は１９日、経営破綻（はたん）した英会話学校最大手「ＮＯＶＡ」（破産手続き中）元社長、猿橋望被告（５８）＝業務上横領罪で実刑判決、控訴中＝の監禁容疑で逮捕された指定暴力団山口組系組員（３８）ら３人を、処分保留で釈放した。

警視庁は、９月２８日に東京都中央区のホテル一室で猿橋被告を監禁したとして３人を逮捕した。捜査関係者によると、組員らは警視庁の調べに「一緒にいただけ」などと容疑を否認。猿橋被告もホテル内から外部に電話で連絡を取っていたといい、地検はホテルでのやりとりについて捜査を継続する。

毎日新聞　2009年10月19日　20時42分

Today was the final day of Sahashi's trial, and in their closing statement, the prosecution asked that Sahashi be sentenced to five years in jail stating that his actions caused severe losses to students and employees, and that his taking money from the shayukai fund was no grounds for leniency. The defense reasserted that Sahashi is innocent and that he was trying to save the company from bankruptcy.

In his final statement, Sahashi expressed his desire to do as much as he can to repay the money taken from the fund. The judge will render his decision on August 26.

Comment: It looks like he will do jail time. My guess is that for those affected by Sahashi's actions, five years isn't enough.

Asahi article

猿橋・ＮＯＶＡ元社長に懲役５年求刑　弁護側は無罪主張

2009年7月3日12時12分

経営破綻（はたん）した英会話学校「ＮＯＶＡ」（大阪市、破産手続き中）の社員らの積立金３億２千万円を受講生への返還金に流用したとして、業務上横領の罪に問われた元社長猿橋望（さはし・のぞむ）被告（５７）の論告求刑公判が３日、大阪地裁であった。検察側は「経営に失敗し、資金繰りに窮したオーナー社長が従業員の積立金に手をつけた行為に情状酌量の余地はなく、被害も多額だ」と述べ、懲役５年を求刑した。弁護側は最終弁論で改めて無罪を主張した。

猿橋元社長は最終意見陳述で「積立金の返済は私個人としてできる限り努力したい」と述べた。審理はこの日で終わり、判決は８月２６日に言い渡される。

検察側は論告で、ＮＯＶＡの資金繰りは０７年６月の経済産業省による一部業務停止命令などがきっかけで悪化したと説明。支援企業も見つからず、受講生への返還金などの支払期限を迎えた同７月、手をつけてはいけない資金と知りつつ不正流用に踏み切ったと主張。被害が弁償されていない点も踏まえ、実刑が相当とした。

一方、弁護側は最終弁論で、元経理担当次長（５０）＝起訴猶予処分＝が公判で「積立金があることは私から元社長に報告した」とした証言などから、元社長が返還金に使うことを主導したわけではないと反論。さらに、会社の倒産を防ぐ目的があり、返還金にあてた後には返済するつもりだったとして、違法とはいえないと主張した。

Day 6 of Sahashi's trial was today (funny, the papers seemed to have skipped reporting on the 4th and 5th sessions), and the notion that he might get off with a light sentence seems to have gained some ground. According to the Asahi shimbun, the judge threw out 2 depositions given by the assistant manager during the investigation in which he stated that Sahashi had instructed him to use money from the shayukai employee's fund.

During the second session of the trial, the assistant manager revised his statement, testifying that he told Sahashi about the money in the fund but never received any instructions from him in advance. This contradicts the prosecutor's assertion that Sahashi gave directions to divert the funds from the outset. It also contradicts testimony from Sahashi who said that he was told about the money and understood that it could be used to pay for canceled lesson contracts.

This looks like a blow for the prosecution as it loses the testimony of a key witness. At the very least, some doubt as to whether Sahashi acted illegally has been introduced and this can only benefit him.

Asahi article

「ＮＯＶＡ元社長指示」供述調書却下　公判証言を重視

2009年6月26日

経営破綻（はたん）した英会話学校「ＮＯＶＡ」（大阪市）の社員らの積立金３億２千万円を不正流用したとして業務上横領の罪に問われ、無罪を主張している元社長、猿橋望（さはし・のぞむ）被告（５７）の第６回公判が２６日、大阪地裁であった。樋口裕晃裁判長は、同社の元経理担当次長（５０）が「猿橋元社長から積立金の流用を指示された」とした捜査段階の供述調書２通について、検察側の証拠申請を却下した。

元次長は、猿橋元社長の共犯容疑で逮捕され、不起訴処分（起訴猶予）になっている。証人出廷した第２回公判で「積立金があることは私から元社長に報告した。元社長から事前に示唆されてはいない」と述べ、捜査段階の供述を修正。元社長が当初から不正流用を主導したとする検察側の主張を否定し、元社長は積立金があるとの報告を受けて受講生への返還金に使うことを了承しただけだとする弁護側の主張に沿う証言をしていた。樋口裁判長は公判での証言を重視したとみられる。

Update on the Sahashi trial today. According to the Sankei shimbun, Sahashi testified that he didn't know how much money was in the shayukai employee's fund and didn't remember checking the balance himself. He also denied that taking money from the fund was his idea.

Sahashi testified that back in the summer of 2007, NOVA was hurting for cash and wasn't able to pay employee salaries. He stressed that he realized that he had to do something about the situation and decided to use his own shares in the company as collateral to come up with some money.

In previous court sessions, testimony was given that a former assistant manager told Sahashi about the money in the shayukai fund, and that Sahashi ultimately decided that there was no alternative but to "borrow" from the fund.

Comment: I don't remember? I don't understand his strategy. Whatever it is, it makes little sense. Sahashi would have us believe that he was the noble president doing everything in his power to save the company and pay salaries, but he doesn't remember anything about the shayukai fund, and "borrowing" from it wasn't his idea anyway. Apparently Sahashi thinks he can have his cake and eat it, too.

Sankei article

積立金の流用経緯は「よく覚えていない」　ＮＯＶＡ元社長が証言

2009.6.17 11:42

経営破綻（はたん）した英会話学校「ＮＯＶＡ」の社員らの積立金３億２千万円を横領したとして、業務上横領罪に問われた元社長、猿橋望被告（５７）の第５回公判が１７日、大阪地裁（樋口裕晃裁判長）で開かれた。猿橋被告は被告人質問で、積立金を流用した経緯について「よく覚えていないが、積立金の残高は知らなかった。自分で確認した覚えもない」と話し、流用が自らの発案であることを否定した。

また、「当時は資金繰りが悪化し、売り上げで社員の給与をまかなえる状況ではなかった」と証言。「給与が気になり、私がなんとかしなければならないと思った。個人で持っている株券を売却したり、担保に入れたりした」と強調した。

これまでに開かれた公判では、元経理担当次長も「積立金があることは私から報告した。（猿橋被告は）考えて、最終的にはやむを得ない状況なので借りて対応するという指示を頂いた」と証言している。

起訴状によると、猿橋被告は従業員らが福利増進を図ることを目的とする「社友会」の積立金を、ＮＯＶＡの事業資金へ流用することを計画。元役員らと共謀して平成１９年７月２０日ごろ、社友会の口座にあった３億２千万円をノヴァ企画の口座に入金して横領したとされる。

Sparse reporting on the trial, but this is what happened in the last two court sessions.

Day 2, June 3. The former assistant manager of accounting was put on the stand and testified that Sahashi directed him to use money from the shayukai employee's fund to refund canceled lesson contracts. (The article doesn't go into specifics, but notes the assistant manager was arrested with Sahashi last June. This suggests that it was Toshihiko Murata, the former head of NOVA Kikaku, on the stand.) He also stated that he believed that the money would be returned to the fund, supporting the defense's argument that Sahashi did nothing illegal.

When pressed on Sahashi suggesting that money be diverted, the assistant manager testified that the day before refunds were due to paid, he told Sahashi about the money in the employee's fund and Sahashi instructed him to temporarily borrow the money since there were no other options to raise money.

Day 3, June 9. Today's court session featured testimony from the manager in charge of employee payroll who said that what Sahashi did was wrong. He said that Sahashi had on previous occasions taken money from the shayukai fund, and that Sahashi had ignored his requests to stop. When asked about the money being used to refund canceled lesson contracts, the manager stated that he knew NOVA was having money problems, but the money in the fund should never have been touched.

Article on Day 2 testimony

ＮＯＶＡ積立金流用は元社長指示　元経理担当が証言

経営破綻した英会話学校ＮＯＶＡの社員積立金が流用された事件で、業務上横領罪に問われた元社 長猿橋望被告（５７）の公判が３日、大阪地裁（樋口裕晃裁判長）であり、経理担当の元次長（５０）が「積立金を借りて受講生の解約返還金に充てるよう元社 長から指示された」と証言した。

その上で「借りた積立金は必ず返せると確信していた」と説明。「不法に金を得る意思はなく無罪」とする弁護側の主張に沿う証言をした。

元次長は、猿橋被告が流用を持ちかけたとする検察側の主張について「（返還期日の）前日に、自分から積立金があることを報告した。事前に流用を示唆されたことはない」と否定。「仕方ないので一時的に借りろ、という趣旨の指示だった」と説明した。

元次長は昨年６月、猿橋被告の共犯として逮捕されたが、起訴猶予処分となった。

起訴状によると、猿橋被告は２００７年７月２０日、福利厚生のためにつくられた「社友会」の積立金３億２千万円を関連会社の銀行口座に移して横領したとしている。

Article on Day 3 testimony

ＮＯＶＡ元課長「元社長のやり方間違い」　大阪地裁で証言

2009.6.9 11:34

経営破綻（はたん）した英会話学校ＮＯＶＡの社員積立金が受講生の解約返還金に流用された事件で、業務上横領罪に問われた元社長猿橋望被告（５７）の第３回公判が９日、大阪地裁（樋口裕晃裁判長）であり、社員の給与管理を担当していた元人事管理課長が「元社長はやり方を間違えた」と厳しい口調で述べた。

元課長は「過去にも元社長の独断で積立金が流用されたことがあり、何度か改善を申し入れたが受け入れられなかった」と証言。解約返還金に使われたことについては「資金繰りが苦しかったとはいえ、やむを得ないとは思わない」と述べた。

起訴状によると、猿橋被告は平成１９年７月２０日、福利厚生のためにつくられた「社友会」の積立金３億２千万円を関連会社の銀行口座に移して横領したとしている。

Edit June 17: Edited day 2 testimony to clarify that it was the assistant manager, not Sahashi, who brought up the money in the shayukai fund.

From Japan Today, a pretty standard interview with the president and CEO of an English school, but this bit caught my eye:

Do shady operators in the English school business tar everyone with the same brush?

I would say that archaic business models that don’t function well in this industry have forced some schools to be more aggressive in ways that are inappropriate for an education-oriented company. When Nova launched, it was in the early bubble days of easy financing. All the contracts were signed with loan companies and the cash was prepaid to the company. So in a situation like that, you have a lot of cash coming in the door, but you have increasing liabilities for lessons that haven’t been taken. Now for two or three years, the student slowly works it off. If they don’t work it off, the contract expires and the money is yours. But what happens is you have no consistent cash flow like rent when you own an apartment or building.

Having prepaid classes really drives cash flow. It’s like an insurance company float getting premiums in advance which they invest. What’s happened in the industry is that Nova and all these other companies had 100% float and really huge floats to be honest. This brought in vast amounts of cash which they over used to expand. With Nova, all it took was a little bit of a downturn and it wiped them out completely because they had 46.7 billion yen worth of debt to their customers which they should have refunded but were unable to. It ends up looking like an overextended multilevel marketing business in some ways with the fly wheel spinning faster and faster until it eventually collapses.

I'm nitpicking, but I don't think "a little bit of a downturn" means what he thinks it means, unless fraudulent business practices, losing in the Supreme Court, and receiving 6-month sanction from METI constitutes a "downturn."

The blog Tofugu has an interview with a current neo-NOVA employee. There's not a lot you haven't heard before, but it's still worth a read for its summary of the aftermath of NOVA's collapse and the perspective on what it's like working for NOVA now.

If you're thinking about working in Japan, the word on NOVA is simple: Don't bother working for them.

5. Would you recommend anyone coming to Japan to try and get a job at G. Education?

Honestly? At this point, no. Come to Japan and try to get a job, sure. But don’t try with G. Education… too much is up in the air at this point, the company hasn’t really figured out what the hell it’s doing and is still not turning a profit as of yet. We’re all still sort of holding our breath for the second grand finale, though that is by no means for sure what’s going to happen. The bottom line is that the future is uncertain, and the management is clueless. I shudder to imagine the mixups and lack of help someone brand-new to Japan would have, all on behalf of G. Education.

Best bet is to get a contract with one of the other big eikaiwas before setting foot in Japan, unless you’ve got a significant savings and don’t mind tightening your belt and not indulging in the tourist experience until your situation gets a bit stable. You can build a decent schedule that will support a comfortable lifestyle, including partying and touristy stuff, but it takes time and multiple small companies.

Amazingly, this teacher has fond memories of NOVA:

Old NOVA, while a typically evil corporation out to squeeze every bit of profit it could from its customers and its employees, was at least reasonably efficient and under control. When management told us something, we generally could feel it was reliable (up until the spiral into bankruptcy, anyways). It knew how to manage foreign employees and had a system set up that took care of all the little details that foreign instructors would have to deal with, moving to a foreign country. The new NOVA is lacking in reliability, know-how, awareness of the differences between foreign and Japanese management style / work expectations

So, old NOVA was evil, and the new NOVA is a mess, but as long as the paychecks keep coming in everything is OK. That's an awful justification. You have three choices when you work for an employer like this:

1. Fight for your rights and take them to court if necessary
2. Quit and find another job
3. Give up on your life in Japan and return home

Sadly, it seems this particular teacher has chosen a fourth option: do nothing. G.communication and schools like it will continue to limp along for a long time so long as they have a steady supply of compliant teachers suckers. Don't be a sucker if you want to teach in Japan.