In Japan, Teaching English for Food

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When Natasha Steele came to Japan from her native Australia earlier this year to teach English, she was looking forward to immersing herself in a foreign culture while earning a little money on the side. Now, after the spectacular collapse of her employer, Japan’s biggest English language school chain, Steele has found herself jobless, threatened with eviction and hungry. “I was taken out and afterward, she took me to a bakery and told me I could have anything I wanted,” she says of one charitable student. “She just wanted to know I had enough food for at least two weeks.”

For many college graduates from English-speaking countries, spending a few months in Japan teaching English is a time-honored tradition. But after Nova shut the doors of its more than 800 locations worldwide last week, that tradition is looking precarious. The closure has left over 300,000 Nova students deprived of their prepaid English lessons, and many of its 5,000 foreign language teachers, like Steele, unlikely charity cases.

Nova, started by CEO Nozomu Sahashi in 1981 upon his return from studying in Paris, grew into a publicly listed chain with over 900 locations at its peak. But things started to unravel for the company in April, after Japan’s Supreme Court sided with a former student who sued the school over tuition refunds. Its rapid expansion had been funded largely through a prepaid credit system, where students bought thousands of dollars worth of lessons up front and received only partial refunds in the event of midterm cancellations. A subsequent government investigation led to a partial suspension of Nova’s operations, at which point hundreds of thousands of students demanded a refund on their prepaid tuition. The result was the equivalent of a bank run: as students rushed to close their accounts, the company fell some $380 million in debt and in October filed for corporate rehabilitation, the Japanese equivalent of chapter 11 bankruptcy. This has made it impossible for Nova’s creditors ? mostly students and teachers demanding tuition refunds and unpaid wages ? to collect their money. For the unsuspecting teachers, this has meant a crash course in Japanese labor law. Several have taken to the streets, leading demonstrations against Nova and Sahashi, while others have held press conferences accompanied by teachers’ union representatives ? Kristen Moon, a freshly arrived American, even appeared dressed as Nova’s corporate mascot, a pink bunny rabbit that has become famous through Nova TV commercials aired across Japan. Some airlines have offered discount flights home for cash-strapped teachers, while embassies have opened hotlines to aid their near-homeless citizens. Former Nova employees last week announced a “lessons for food” program, which would allow students to pay for lessons in meals and food items. Meanwhile, the sheer number of out-of-work teachers have glutted the local labor market for English instruction, causing other language schools to stop accepting applications.

The troubles for Nova don’t end there. A report by court-appointed lawyers investigating the case alleges that founder Sahashi ? since fired by the board and currently in hiding ? had turned his company into something of a personal piggy bank, lining his pockets through such ruses as buying teaching equipment from affiliated companies and selling them to Nova students at grossly inflated prices. He is also suspected of insider trading, misappropriation, and aggravated breach of trust. (Sahashi’s representative has filed a petition refuting such claims.) On Oct. 30, one government lawyer invited reporters to check out the lavish office at Nova’s Osaka headquarters ? complete with a fully stocked wet bar and a hidden bedroom and sauna. “Sahashi is still attempting the sell company shares in hiding. I wanted to show the extent of his misdeeds,” said Osaka attorney Toshiaki Higashibatake, who organized the event. Under Japanese corporate law, Nova can stay intact if it can find sponsors to underwrite its current business. But the company is losing money so rapidly ? its market value has been halved since filing for bankruptcy ? that the search for financial sponsors has been rushed, with proceedings expected to conclude later this week. If it fails to find sponsors for a bailout, Nova faces liquidation.

It’s unlikely that the scandal will put an end to Japan’s $1.2 billion foreign language education industry. Despite a widespread appetite for learning and an educational system that mandates six years of English study, Japan ranks below North Korea on standardized English proficiency tests, according to the U.S.-based Educational Testing Service. All that is small comfort, however, for teachers who share Steele’s plight. Said Moon, the bunny rabbit at the press conference: “I love this country, but I’m in limbo and my life is on hold.”

http://www.time.com/time/world/article/0,8599,1680652,00.html

Ex-pat English teachers stranded by collapse of Japan’s Nova schools

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In a country teeming with cute cartoon characters, few are cuter or better known than the Nova bunny. The pink mascot stood in the doorways of language schools across Japan, promising a short educational encounter with an exotic foreigner. But now, thousands of teachers and students have found that the bunny bites, hard.

The collapse of Nova, Japan’s biggest employer of foreigners, has left 4,000 teachers ? including more than 900 from the UK ? stranded without work, money and, in some cases, a place to live. “There are people who don’t know where their next meal is coming from,” said Bob Tench, an official with Nova’s union. “It’s very distressing.”

The union is offering a lessons-for-food programme to former Nova students, 300,000 of whom have lost out on classes they have paid for. The British embassy in Tokyo has fielded dozens of calls from distressed ex-pats and several airlines are offering Nova teachers discounted tickets home.

“I came to pay off my college overdraft and credit card and now I’m living on pot noodles and cheap rice dishes,” said Alec Macfarlane, who joined Nova in the summer after graduating from Liverpool University. Like many teachers, he is officially homeless, has not been paid for months, and is depending on the charity of friends and family in the UK.

The unravelling of one of Japan’s most popular high-street companies has riveted nightly television viewers. The ubiquitous bunny fronted the nation’s largest private language chain, controlling nearly half the market for English-language teaching; two generations of Japanese had their first and sometimes only encounter with a foreigner in a Nova classroom. But while the company’s aggressive cost-cutting helped fuel Japan’s language-learning boom, its president, Nozomu Sahashi, was criticised for his stingy hiring policies and take-no-prisoners’ marketing.

Nova’s slide began earlier this year when the government ordered it to close temporarily for posting misleading advertisements, and banned it from selling long-term contracts. With students abandoning it and suing for refunds, it filed for bankruptcy last week, crippled by debts of 44bn yen (£185m).

Mr. Sahashi has fled the company’s offices and is nowhere to be found. In the meantime, Nova is promising that it will be back in business once it sorts out its financial problems. But furious ex-pat bloggers have already posted their verdict on their websites. “I’d like to boil that bunny in a pot,” wrote one.

http://news.independent.co.uk/world/asia/article3129679.ece

Ex-NOVA boss questioned for breaking Labor Standards Law

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Nozomu Sahashi, the founder of the failed NOVA Corp., has been questioned for breaking the Labor Standards Law by failing to pay his employees, government sources said.

Officials of the Osaka Labor Bureau of the Health, Labor and Welfare Ministry questioned Sahashi, 56, last Monday. They are considering whether to file a criminal complaint with law enforcers, accusing him of violating the Labor Standards Law.

During questioning, Sahashi admitted that the company failed to pay wages to employees. “We tried to raise the money to pay wages by all means, but we couldn’t,” he was quoted as telling bureau officials.

NOVA’s financial situation took a dive after the Economy, Trade and Industry Ministry imposed a six-month ban from making long-term contracts with students in June for its unfair business practices.

It has not paid salaries for September and October to Japanese employees and wages for October to instructors. The unpaid wages amount to about 4 billion yen.

http://mdn.mainichi.jp/national/news/20071103p2a00m0na004000c.html

Nova burns out

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The tragedy of the English-teaching company Nova is a gripping and revealing one. That students should have their fees returned and teachers and staff be given their salaries should go without saying. That the company had serious management and leadership problems should be equally obvious. Still, the Nova episode is reason to consider several aspects of Japanese society that shaped the rise and fall of one of Japan’s best-known companies.

Before the revelations of so many problems, Nova seemed a clear example of the best side of Japanese economics. The company started with little more than rent for “ekimae” (station-front) office space and a cute pink bunny icon for advertising. That a multibillion yen business could still be built from the ground up seemed to show that Japan’s system was not too rigid to allow innovation. Yet, the sad ending shows that the system is not so lax that improprieties can continue forever.

Apparently, Nova’s rise depended on alleged high-level contacts with various ministry-connected foundations and large investments by risk-taking entrepreneurs. Without that, and a reputedly autocratic management style, Nova could not have expanded so rapidly. The company, however, seemed unable to transform its initial pride and appeal into consistent strength and lasting quality. Ultimately, a combination of a good product, competent management and consumer-friendly attitude is the best business model.

When things go wrong for companies without those qualities, consumers are especially unforgiving. Nova did not endanger the health of children or potentially poison anyone, but their betrayal of trust is inexcusable. The outrage of students, who handed over their hard-earned money, and teachers and staff, who gave precious work hours still uncompensated, seems more than justified. As if acting out some ancient tragic drama, excessive pride blinded the company’s management to internal problems that were obvious to everyone else.

The estimated figures splashed across front pages are startlingly high. The outstanding debt stands at ¥40-plus billion. The language learning industry in Japan is a highly profitable one. People are willing to pay, but usually seek a balance of price and value. Surely the wiser students must have tried to find the best teachers and arranged their schedules accordingly. Yet, even these savvy consumer/learners were cheated in the end. Discount education simply does not work.

The figure of 300,000 students nationwide is almost as staggering. That number means Nova is perhaps the largest language-education provider in Japan. Ironically, most of the students attending Nova had already received the mandatory six years of English language education through high school, and either wanted more or needed more instruction. The education ministry should be reminded that something in language education is sorely lacking. It seems almost as if the public schools have simply been prepping students for Nova!

Beyond the problems of one company, these student numbers reveal how strongly people want to speak another language. Studying a language requires time and money, and clearly, people were ready to invest both. The broad awareness of the linguistic demands of globalization and the desire to get beyond the boundaries of Japan, if only for a couple class hours per week, are remarkable. Students genuinely put their money where their mouths were.

At the same time, this episode has revealed the large number of foreigners willing to come to Japan. As they go about the difficult task of recovering their wages and start to look for other jobs, they will be deciding whether to stay longer or give up and go home. One imagines them all listing their phone numbers outside the scores of now-closed schools to arrange private lessons. At the high point, over 6,000 foreign teachers were recruited to work at Nova. They may have come as a lark, but formed part of Japanese society for the time they were here. In this regard, Nova was a powerful force for internationalization.

Whatever the future holds for Nova after its bankruptcy filing and management restructuring, the need for English lessons will not disappear, nor will the push for internationalizing somehow reverse. Some students may give up, but most will continue to study in other ways. That English language study has become such an important part of Japanese culture is no surprise, but its vast scope, not to mention its profitability, still amazes. Nova may have exploded, or imploded, but the positive reasons for its rise will remain and begin to establish new and better approaches to learning English in Japan much sooner than we might imagine.

http://search.japantimes.co.jp/cgi-bin/ed20071104a1.html

Former Nova boss oblivious to people’s anguish

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On [deposed Nova Corp. president Nozomu Sahashi’s] desk sat the company’s mascot–the bright pink Nova usagi, a bunny with long ears and the beak of a bird. The ears and the beak are said to symbolize the basics of mastering a foreign language, which are to listen a lot and speak a lot.

The animal is completely guiltless, of course, but I imagine many people must feel angry every time they look at its innocent face.

But Sahashi apparently has no ears to listen to these people’s angry shouts, nor a beak-mouth with which to utter words of apology.

http://www.asahi.com/english/Herald-asahi/TKY200711030050.html

Nova was cash cow for ex-boss / Sahashi overcharged school chain to repay debts at other parts of group

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Five companies affiliated with Ginganet Corp., owned by former Nova Corp. President Nozomu Sahashi, obtained 4 billion yen in loans from failed Ishikawa Bank in return for cooperating with the bank’s illicit transactions, The Yomiuri Shimbun has learned.

After the bank went bankrupt in December 2001, Osaka-based Ginganet’s funding situation got worse. A court-appointed administrator of Nova said Ginganet–a communication network service firm–had earned billions of yen by selling IP videophones to Nova at inflated prices. It is believed that Sahashi was trying to raise funds for repayment of loans by Ginganet, which was facing financial difficulties, by overcharging Nova for the IP phones.

Nova filed for court protection under the Corporate Rehabilitation Law on Oct. 26.

In-house documents of the bank, based in Kanazawa, said it extended loans of 25.4 billion yen to several Nova-affiliated companies and the five Ginganet group companies between March 2000 and September 2001. In return, the companies helped the bank increase its capital by 13 billion yen using some of the loaned money.

The Ginganet group companies obtained at least 4 billion yen in loans from Ishikawa Bank on the pretext of purchasing terminals for the IP videophone system, while the group companies took up 521,500 shares in the bank, worth 2.01 billion yen.

The Company Law and other legislation prohibit transactions in which a firm extends a loan in return for capital investment.

During a trial of some former Ishikawa Bank executives who were charged with aggravated breach of trust, prosecutors detailed how some of the bank’s capital increases were based on illegal transactions.

It is believed the then Ishikawa Bank president and others asked Sahashi and Nova advisers to help the bank increase its capital. Sahashi is believed to have accepted the request on condition that the bank extended loans to Ginganet that exceeded its investment in Ishikawa Bank.

According to sources close to Ginganet, Sahashi used to say, “I want my own bank.”

The fact that Ishikawa Bank filed for insolvency with the Financial Services Agency in December 2001 despite efforts to rehabilitate itself left the Ginganet group pressed to repay a huge amount of loans.

According to Nova’s administrators and other sources, Ginganet began to sell a new model of IP videophone from July 2002, immediately after the bank’s failure. It sold them to Nova at a price several times greater than cost, earning billions of yen over five years.

Ginganet was able to repay the loans rapidly even though selling the IP phones was its only source of income. Ginganet’s debt to Ishikawa Bank was taken over by a regional bank. By April it was down to 250 million yen, indicating that most of Ginganet’s profits were being allocated to loan repayment.

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Nova instructors forced to vacate

OSAKA–Many foreign instructors working for troubled English language school operator Nova Corp. have been asked to vacate their apartments, rented by Nova, due to arrears of rent.

Preservation administrators of Nova, which has filed for bankruptcy protection, have asked the landlords to wait until a corporate sponsor is found for the firm. However, some instructors have already been evicted, unable to make ends meet without salaries.

Many instructors are waiting in hope for the firm to enter the rehabilitation process, but others have decided to return to their home countries.

“You have to leave the apartment, or we’ll stop the electricity and gas, and change the lock,” a real estate firm employee told Canadian Nova instructor Stephen Clarkson on Oct. 27, the day after Nova filed for court protection under the Corporate Rehabilitation Law, at his apartment in Abeno Ward, Osaka.

Clarkson’s landlord presented him with a document stating that he would agree to vacate the apartment by Sunday. Clarkson, 24, had no choice but to sign it.

His roommate, a 23-year-old Canadian man, had just moved in, but now also has to vacate.

Most Nova instructors live in apartments rented by Nova. Nova deducted 60,000 yen from each instructor’s monthly salary in advance, stating that it constituted the self-pay amount of the rent.

Clarkson and his roommate had together paid Nova 120,000 yen per month for their apartment, but the landlord told them the actual rent was 70,000 yen a month. They also learned that Nova had failed to pay the rent the past two months.

After Nova filed for court protection, one of the firm’s preservation administrators said at a press conference: “Instructors are not to blame. We’ll take responsibility, so I hope [the landlords] will wait [for rent payments].”

http://www.yomiuri.co.jp/dy/national/20071103TDY02307.htm

Nova boss grilled, may face charges

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¥100 BILLION IN LIABILITIES

The Osaka Central Labor Standards Supervision Office said Friday it questioned ex-Nova Corp. President Nozomu Sahashi this week on suspicion of breaking the law by failing to pay its employees.

It was meanwhile revealed that Nova would have liabilities in excess of assets totaling nearly ¥100 billion if the foreign-language school chain is liquidated, because the actual value of its assets is only about a 10th of book value, sources said.

According to the bankruptcy petition Nova filed Oct. 26 with the Osaka District Court to request protection from creditors and rehabilitation, liabilities exceeded assets by about ¥1.6 billion at the end of July, with assets totaling ¥42.3 billion and liabilities ¥43.9 billion.

But Nova’s actual negative net worth will hit at least ¥94 billion if the company is liquidated because its assets ? mainly textbooks, school equipment and other items ? would be worth only ¥4.2 billion after depreciation, the sources said, meaning its liabilities total somewhere in excess of ¥98 billion.

The liabilities would comprise some ¥70 billion worth of tuition to be reimbursed to students and loans from banks, the sources said.

That number may swell even further because it delayed paying rent for its schools and neglected to pay wages to instructors and other employees since August.

When the labor office quizzed Sahashi, 56, on Monday, he claimed Nova was unable to raise the funds needed to cover its payroll obligations because it was turned down for a loan request, sources at the office said.

Earlier reports, however, said Sahashi and his family had unloaded their majority stake in Nova and a controlling stake in Osaka videophone equipment supplier Ginganet Co., which allegedly gouged the chain’s students for their equipment. Nova shares went through wild price and volume fluctuations from late August to mid-September before it filed for protection in October.

The labor office had already confirmed in interviews that the wages of both Japanese and foreign employees were not paid since at least September. What it wants to know now is whether the company didn’t pay despite being able to. This will be key in deciding whether to pursue criminal charges against Sahashi and other Nova executives, they said.

The labor office had urged Sahashi to come in for questioning repeatedly before he disappeared from public view just before Nova’s Oct. 26 bankruptcy filing. The night before, Nova’s board of directors axed Sahashi in absentia. He couldn’t be contacted.

Nova began struggling with its finances after the Economy, Trade and Industry Ministry ordered it to partially suspend business in June for six months for lying to consumers about its services when soliciting students.

According to a labor union at Nova, salaries for regular employees were delayed for each of the three months since July, and the teachers have not been paid since September.

Nova failed to pay salaries for October and subsequently sought court protection.

If the unpaid wages cover two months, Nova will owe its workers a total of nearly ¥4 billion, according to a Nova administrator.

Nova quickly expanded with relatively low class fees and aggressive media publicity, and once boasted 480,000 students at its peak in 2005. It also had previous bouts of troubles, including lawsuits filed by students seeking reimbursements of fees that the company lost and subsequently had to pay.

http://search.japantimes.co.jp/cgi-bin/nn20071103a2.html

Japanese Lesson: How Do You Say, ‘Taken for a Ride’?

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Fresh out of college, Sam Gordon bought a one-way ticket to Tokyo for a chance to explore Japan’s exotic culture while teaching English at the nation’s largest language school. All it took to get the job was one simple interview.

The adventure, which began five years ago, has abruptly come to an end. His employer, Nova Corp., hasn’t paid him since September. The company closed its operations last week and filed for court protection, following a government crackdown on its business strategy. With $20 left in his bank account, the 28-year-old Mr. Gordon says he is living on his credit card.

“At least I have a big fridge and still have some food in it,” says Mr. Gordon. He doesn’t want to go home to Milford, Del., just yet, he says, because he’d have to borrow money for the plane ticket.

Mr. Gordon is one of more than 4,000 foreign-language teachers working for Nova to be slammed by the biggest scandal in Japan’s foreign community in years. The company, renowned in Japan for the hip-shaking pink bunny in its commercials, had been on a hiring binge, setting up recruitment offices in the U.S. and the United Kingdom and prowling college campuses offering jobs.

Nozomu Sahashi, the company’s quirky founder, was fired last week as president and has dropped from sight. Now, worrisome details are trickling out: The 56-year-old executive had quietly moved profits from publicly traded Nova to his private company, a court-appointed administrator alleged at a news conference. The administrators, who are scrambling to find a sponsor to help turn around Nova, showed reporters his lavish office, which has a Jacuzzi, a tea room and a secret bedroom.

Now, the Nova teachers are jobless and those who have lived from paycheck to paycheck are stuck in Japan. Some have been threatened with eviction from their apartments because Nova, which had provided housing and deducted the rent from teachers’ salaries, stopped paying rent months ago. In the past week, 300 Nova teachers have swarmed the usually orderly employment agency office in western Tokyo, called Hello Work, seeking jobs.

One labor union is planning to arrange for teachers in distress to give lessons in exchange for a Japanese bento-box meal. Alarmed that so many of its citizens are affected, the Australian government has struck a deal with Qantas Airways Ltd. to provide discounted one-way air tickets to Sydney.

“I’m not really looking for a new job because the market is just flooded with teachers,” says Matya Sheppard, a 23-year-old Canadian Nova teacher who is dipping into her savings to pay for food and other expenses.

“I have no one to talk to. I’m in limbo,” says Kristen Moon, a 23-year-old teacher from Philadelphia who fears she will lose her Tokyo apartment. Ms. Moon, who came to Japan in May for a “new experience” after graduating from college in New Zealand, is getting along by giving private lessons to several Nova students.

English-conversation schools are a big business in Japan. Millions of Japanese dream of speaking English. But the six years of language classes given in middle and high schools focus on grammar, not conversation, so few children learn to speak English well. The $3.5-billion-a-year foreign-language-education industry teems with more than 1,100 companies catering to about two million students, according to the Japan Association for the Promotion of Foreign Language Education.

The Osaka-born Mr. Sahashi, who founded Nova in 1981, used a particularly inviting pitch. He promised his clients native English teachers at half the price or less charged by rival schools. He touted lessons as cheap as a movie ticket, so students could drop by as casually as if they were going to a bar. There was one catch: To get the cheapest price — about $13.50 for a 40-minute class — students had to pay in advance for 600 lessons.

Armed with a wildly popular marketing campaign featuring a cheeky pink bunny mascot, Nova rapidly opened 900 schools, took on 400,000 students ranging from toddlers to businesspeople and dominated the language-school industry. The bunny, which shook its hips and, in TV commercials, came to the rescue of people who wanted to improve their foreign-language skills, became a nationwide phenomenon. It soon even appeared as a character in videogames. The school’s convenient locations and policy of letting students come in whenever they wanted to were also a hit. Sales reached $500 million in the year ended March 31.

To gather enough teachers, Nova set up nine recruiting centers in cities from Chicago to Sydney, according to the company’s recruiting Web site, now shut down, and posted ads on Internet job sites. Salaries offered were modest — between $2,000 and $2,600 a month — but the hiring process was simple, consisting mainly of a grammar test and short interview, teachers say. “We interview 100,000 foreigners every year,” wrote Mr. Sahashi in a Japanese magazine article this year.

Once they landed in Japan, teachers say they got straight to work. “It was trial by fire,” says Jerry Johnston, a 24-year-old Floridian who started teaching for Nova in July. Mr. Johnston, who was recruited at a career fair at Florida State University, said an experienced instructor watched him teach for a couple of days and corrected him when he spent too much time on any one part of the lesson plan. Then he was on his own.

Students, meanwhile, found it hard to book lessons because there weren’t enough teachers. And when students quit before attending all their prepaid classes, the school recalculated the lessons at a higher rate, thus reducing their refunds.

Thousands of Nova students complained to consumer-protection agencies. In June, the government effectively banned the sale of Nova’s key product: hugely discounted prepaid tickets. Nova quickly ran out of funds, and checks began to bounce in July. On Friday, the company filed for reorganization proceedings, the equivalent of Chapter 11 bankruptcy proceedings.

That has left students like Mari Matsunami with a bunch of prepaid tickets. “I hope a sponsor will come up and continue the operation so I can use up all the tickets,” says the 39-year-old accountant. Ms. Matsunami, who has taken English lessons at Nova for 10 years, says she believes her unused tickets are worth about $1,300.

Many Nova teachers, hoping to remain in Japan, are looking for other jobs. It hasn’t been easy, since most don’t speak Japanese.

http://online.wsj.com/article/SB119394083023779349.html?mod=googlenews_wsj

Foreign language instructors ‘will teach for food’ in Japan

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Foreign language teachers who suddenly lost their jobs when Japan’s largest language school operator closed have been forced to rely on food handouts from their former students in exchange for private lessons, teachers and union officials said Thursday. Impromptu lessons are being offered in parks and restaurants because teachers can’t afford classrooms, or even apartments, they said.

“We know teachers who don’t know where their next meal is coming from,” the president of the Nova Union of Staff and Teachers, Robert Tench, said at a press conference Thursday. “They are in desperate need.”

Some 4,500 foreign language teachers from all around the world lost their jobs with Japan’s largest language school operator, Nova Corp, on October 19.

In response to the sudden end to their livelihoods, the Nova Union of Staff and Teachers launched a “lessons for food” programme for the teachers who are on the verge of becoming homeless.

Natasha Steele, from Sydney, Australia, was fed by her student and came home with a bag full of pastries, enough to feed her for two weeks.

The 26-year-old teacher, who was recruited in Australia and arrived in Japan only 10 months ago, was recently evicted from company accommodation along with her two roommates.

One teacher from Canada lost her job and apartment nine days into her new life in Japan, while a Scottish teacher had to have her parents pay for a flight back home after only a month into her job.

The union also plans to launch a Nova relief fund where people can donate money to help the teachers thrown out of jobs and to request assistance from various embassies, including those of Australia, Britain, Canada, the United States and France.

Australia’s Qantas and British Airways have offered Nova teachers discounted return flights home. Many teachers have not been paid for two months and they cannot afford airline tickets, Tench said.

Last Friday their employer filed for bankruptcy. The scandal-tainted company was granted court protection under the Corporate Rehabilitation Law.

All schools in its network abruptly suspended operations a week ago, dumping thousands of teachers into Japan’s foreign language market.

Nova accumulated debts of about 43.9 billion yen (381.89 million dollars) when students cancelled lessons after the Ministry of Economy, Trade and Industry ordered the company to suspend some of its classes in June.

The ministry’s order came after it determined that the company had falsely advertised its services.

The scandal caused a rapid plunge in student enrollment. At its peak in 2005, Nova had 480,000 students learning English, French, German, Spanish, Italian and Chinese at branches nationwide.

Some 420,000 students, as well as instructors, were only informed about the temporary suspension of the schools through the media or notices posted in classrooms.

The company had already been in labour disputes with its employees for several years.

As the industry leader, Nova had a profound influence in the industry, driving down prices for lessons, standards of services and employment conditions, according to said Louis Carlet of the National Union of General Workers Tokyo Nambu, which represents Nova union.

Nova has said it aims to find a supporter for its rehabilitation within a month, but four Japanese firms have already showed reluctance to join with the troubled company, according to the Kyodo News Agency.

Meanwhile, Nova’s embattled president, Nozomu Sahashi, 56, has gone into hiding.

“Not paying wages is a crime under the Labour Law,” said Tench, who had been a teacher at Nova for 13 years.

http://www.earthtimes.org/articles/show/134491.html

Former Nova president admits to nonpayments of salaries

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Former Nova Corp. President Nozomu Sahashi admitted the language school chain withheld wages from thousands of employees, saying the now-defunct company could not raise sufficient funds, Osaka Labor Bureau sources said Friday.

The bureau interviewed Sahashi on suspicion of violating the Labor Standards Law and may seek criminal charges after questioning Nova’s current management team.

http://www.asahi.com/english/Herald-asahi/TKY200711020304.html