Nova Corp President Nozomu Sahashi on Thursday refused to resign from the top post at the largest English-language school operator in Japan over a scandal involving exaggerated advertisements. His refusal came in response to a call for his resignation from Nova shareholders who asked him at their annual meeting to resign to take responsibility for the scandal, which has led to a government order partially suspending Nova’s business operations. “If I resign, the company will collapse,” Sahashi told the meeting in Osaka.
Sahashi apologized for causing the disciplinary action by the government and said Nova has created a management reform committee to investigate the scandal and consider how best to avoid scandals in the future. The committee, consisting of four experts on corporate compliance, will compile an interim report by the end of July and a final one by the end of August, he said.
Eikaiwa
Executives of scandal-tainted companies bow in remorse at shareholder meetings
Executives of scandal-tainted companies bowed deeply in remorse at shareholder meetings on Thursday as stockholders who are aggressively expanding their stakes in companies are gradually making their presence felt.
Nova Corp., the scandal-hit operator of the nation’s largest English-language school network, held its shareholder meeting in Osaka. The company was in the red in the business year ending in March for the second consecutive year.
The Economy, Trade and Industry Ministry has suspended some of Nova’s business operations for its illegal business practices such as illegal contract cancellation procedures.
http://mdn.mainichi-msn.co.jp/national/news/20070628p2a00m0na010000c.html
Nova’s exact bid raises eyebrows
Nova Corp. in Osaka, the nation’s largest English school chain, won a public tender for an Osaka Municipal Board of Education program to dispatch assistant language teachers to municipal middle schools in spring 2006 with a price matching the closed ceiling price of 54,850,200 yen, The Yomiuri Shimbun has learned.
A board official said the matching prices were purely coincidental. The board, however, plans to investigate whether information about the tender had been leaked, since the bids matched within a margin of only 100 yen.
The firm also won other public tenders for a similar program for primary schools with bids of 95 to 98 percent of the ceiling prices.
According to the board, three firms, including Nova, participated in public bidding to supply ALTs to 116 middle schools and other schools on March 17, 2006. However, the tender was unsuccessful as all three firms placed bids higher than the target price. The board conducted the second public tender, with a higher target price, the following month. Two firms, including Nova, which had participated in the first tender, and another firm placed bids, with Nova’s matching the ceiling price.
Public tenders for a similar program at 299 municipal primary schools were held by dividing the schools into three groups based on their location on March 17, 2006. Nova’s bid for one group–6.55 million yen, and 98 percent of the ceiling price–was successful, but there were no winning bids for the other two groups.
Nova won one of two tenders held on April 25 the same year, with a bid of 4.59 million yen, 95 percent of the ceiling price, while another firm won a tender for another group with a bid that was 83 percent of the ceiling price.
The board official told a Yomiuri Shimbun reporter that contracts for the programs had to be made quickly because the new term had already begun, but denied the possibility of the leak.
The official also insisted the results of the tenders were coincidental, saying: “If the information of the closed planned price had leaked, would Nova have matched the contract price [down to the hundreds of yen] as doing so was sure to raise questions?”
Nova Union of Staff and Teachers Press Conference
Yesterday was, without a doubt, a media triumph for Nambu, and our struggle for job security for members.
We’ve been trying for so long for this kind of media exposure, and the current Nova news frenzy gave us our opportuniy to make the public aware not only of the working conditions in Nova, but also in the whole of the eikaiwa industry, and in the job market in Japan.
At the news conference yesterday at the Ministry of Health, Labour and Welfare, TV crews from 8 different broadcasters attended, along with numerous journalists. We spoke about the current Nova dispute and about the common problems of foreign workers in Japan.
To Nova, in its current crises, we publically announced the offer of an olive branch, a special peace proposal, to help with the situation: a cessation for now of strike action, in exchange for guaranteed renewal of contracts when requested by teachers.
Following the press conference, a Nambu Nova branch delegation, with the President, the Vice-president, General Secretary, and the Kubikiri-usagi Nova Bunny, tailed by a Fuji TV crew, went to Nova’s Tokyo HQ in Shinjuku. The intention was to deliver the union’s special peace proposal for the dispute to tpge company’s Tokyo head office.
The TV crew were blocked at the door! Nova management refused to come out and talk. No surprises, huh?
However, the company’s behaviour was worse than that: after the union delegation agreed to meet Nova management without the media present, the manager in charge, Robert Vaughan hid and told his staff to say he’d gone home, even though three members of the delegation had seen him in the corridor.
Robert, don’t be afraid. We’re not carrying guns.
The delegation, having drunk tea, but insulted by Vaughan’s declining to come to meet them to accept their proposal, had no alternative than to go tell the waiting TV crew what had happened.
Troubled Nova staff slams work conditions
Nova Corp. teachers and other employees in Tokyo criticized the company Tuesday, saying the troubled chain of foreign-language schools must improve its business not just so it becomes more honest with customers but also for the sake of its workers.
At a news conference, Nova union members also demanded that the firm provide better working conditions for the Osaka-based chain’s roughly 5,000 teachers at its branches nationwide. Although teaching English is Nova’s mainstay, it also offers lessons in other foreign languages.
The rank and file said Nova must improve its thorny relations with its union if the chain hopes to survive the current crisis, in which it was slapped with a six-month ban on offering new long-term student contracts.
“A couple of months ago, (Nova President Nozomu) Sahashi issued a statement asking all the teachers to be friendly with their students and greet them with big smiles,” said Thomas Reichl, the union president, who has been teaching German for 13 years. “We say to Mr. Sahashi, please lead by example and give us something to smile about.”
The union has been fighting Nova for three years to secure a stable work environment in which its teachers can have indefinite or long-term employment agreements instead of annual renewals, and to allow teachers to qualify for social security insurance.
According to the union, negotiations with Nova began in 2004, but when the talks failed to produce results it began organizing strikes and protests the following year. In 2006, the union took its case to the Tokyo Labor Relations Board.
As the largest language school chain in Japan, Nova’s practices effectively set the industry standard, the union said, adding that improved conditions would benefit the entire sector.
Last week, the Ministry of Economy, Trade and Industry imposed a six-month ban on new customer contracts with more than a one-year duration, or more than 70 hours of lessons, because the company engaged in deceptive business practices that affected many of its students.
The violations included distributing pamphlets claiming students, after they sign their lesson contract, can schedule classes at any time or branch, when in fact there was a shortage of teachers at times of peak demand.
Branches were also allegedly reneging on contract cooling-off period reimbursements.
Reichl said the teacher shortage stems from high turnover. Nova teachers who are recruited overseas only stay around eight months because they become disillusioned with their jobs, he said, adding this results in poor teaching standards.
Briton Robert Tench, an English teacher and union treasurer, described the complaints he has received from students.
“I walked in and said ‘Long time no see,’ and then the student said she was not able to reserve any class,” he said.
Tench said the firm may be deliberately keeping teacher numbers low to cut payroll corners.
A lesson for Nova Corp.
The Ministry of Economy, Trade and Industry has decided that Nova Corp., the nation’s largest English-language school chain, violated the Specified Commercial Transaction Law and ordered it to partially suspend business. Saying that Nova committed 18 types of violations, the ministry imposed a six-month ban on new contracts of more than one year or more than 70 hours of lessons with customers. It is of grave concern that the school chain as a whole was involved in the irregularities. Top management must seriously reflect on what the firm did and change its business method.
The following are examples of Nova’s illegal business practices. It distributed pamphlets saying that students could book lessons at any time and at any Nova school, and had students sign contracts, when in fact it was difficult to keep the promise due to a shortage of teachers. It ran ads stating that the admission fee was exempted “only for now” when the fee had always been exempted. When students canceled contracts, Nova refunded smaller than promised amounts or deducted an amount equivalent to the admission fee, despite the fact that the fee had been exempted.
Nova also misled some people to believe that their contract “cooling-off” period had expired and prevented them from canceling their contracts. The Nova headquarters distributed manuals on how to deal with complaints about contracts to Nova offices across the country. But the manuals taught illegal ways of dealing with such complaints.
Behind the illegal business practices seems to be Nova’s aggressive policy to expand the number of its schools to 1,000. It now has just over 900 schools. Nova has about 450,000 students, more than 60 percent of the nation’s English-language school students. Its sales are expected to account for about half the industry’s total sales. Suffering a loss in two consecutive years, Nova had a consolidate loss of 2.4 billion yen in the business year that ended in March. The punishment meted out by METI may frustrate Nova’s plan to go into the black in the current business year. If so, it would only be reaping what it sowed.
Scandals taint private sector / Comsn, Nova wrongdoing shows government’s oversight role vital
The Economy, Trade and Industry Ministry on June 13 prohibited Nova Corp., which operates English conversation schools nationwide, from offering new contracts to students lasting longer than a year for the next six months.
The ministry also will terminate, in the case of Nova, a subsidy to individuals that helps people acquire job skills, which Nova students could obtain to cover part of their tuition fees. From June 20, Nova students will no longer be eligible for the state subsidy.
Both measures effectively block the two companies’ main source of revenue and are very strict–no different from demanding that the two firms withdraw from business.
Nova Corp. eyes capital tie-up
[According to industry sources] the nation’s largest English language school chain is leaning toward a capital alliance as a way to improve its creditworthiness and secure operating expenses.
[Nova] posted a net loss of 3 billion yen in fiscal 2005 and another net loss of 2.4 billion yen in fiscal 2006 as its expansion policy backfired. The number of students fell to 418,000 as of the end of March, down 12.1 percent from a year earlier.
http://www.asahi.com/english/Herald-asahi/TKY200706180093.html