Major travel agency H.I.S. Co. is considering extending assistance to the scandal-tainted Nova Corp. language school chain in the form of a business tieup or financial assistance, sources said Monday.

H.I.S. Chairman Hideo Sawada met with Nova President Nozomu Sahashi late last month in Tokyo to ask about Nova’s financial conditions, according to the sources.

Assistance from H.I.S. would prove a godsend for Nova, which is in desperate need of funds to shore up its sagging operations after the government ordered it to suspend part of its operations as a penalty for fraudulent business practices, the sources said.

Sahashi said in mid-June that Nova will study a capital and business tieup with a partner in another line of business “if necessary,” when he said the company might issue new shares to bolster the firm’s capital base and dispel investor fears.

Meanwhile, an H.I.S. representative said, “The talks (between Sawada and Sahashi) did take place, but no specific deal is in the making.”

An alliance with Nova would probably be appealing to H.I.S. because customers studying foreign languages at Nova could bring in new business for the travel agency, according to industry observers.

Osaka-based Nova, Japan’s biggest English-language school chain, has about 480,000 students. It has been deep in the red for the last two years. Amid its financial plight, allegations surfaced that the company lied to customers in soliciting students and then reneged on the terms of enrollment contracts.

The Ministry of Economy, Trade and Industry issued an order June 13 for Nova to suspended part of its business for six months.

http://search.japantimes.co.jp/cgi-bin/nb20070703a2.html

A tie-up between Nova Corp. and H.I.S. Co. would be interesting, as Nova and H.I.S. have much in common, both being no strangers to disregarding the laws of Japan:

The nation’s largest discount travel agency, HIS, which also runs foreigner-friendly No.1 Travel, has based the price of some air tickets from Japan on the nationality of the traveler, possibly in breach of Japanese law, The Japan Times has learned.

Foreigners trying to buy discount tickets through the company were quoted higher prices than Japanese customers purchasing discount seats on the same flight.

The policy came to light when the company offered a discount ticket to Los Angeles over the telephone to a Japanese caller, but said it was no longer available at the quoted price after finding out a Canadian was the intended traveler.

It then informed the caller that the price for the ticket would be higher for a non-Japanese customer.

However, Japanese Air Law, Article 105, Paragraph 2, clearly states that “no specific passenger or consigner will be unfairly discriminated against.”

http://search.japantimes.co.jp/cgi-bin/fl20060704zg.html

Major travel agency H.I.S. Co. may form an alliance with Nova Corp., the English conversation school operator struggling under a government order to partially suspend operations, sources said.

H.I.S., known for its sales of discount airline tickets, is leaning toward providing financial support to the nation’s largest conversational English school in return for a chance to recruit its students as customers, the sources said.

http://www.asahi.com/english/Herald-asahi/TKY200707030119.html

The Economy, Trade and Industry Ministry issued a document in June 2002 that tolerated English conversation school industry leader Nova Corp.’s controversial practice of minimizing refunds of students who terminated their contracts, according to sources close to the issue.

Four months before the document was issued, the Tokyo metropolitan government began its own administrative procedures against Nova, criticizing the Osaka-based chain’s refund method as being detrimental to departing students.

But because the ministry’s document said the refund method was not wholly illegal, the metropolitan government discontinued its administrative procedure.

Nova had continued its refund calculation method until March, when the Supreme Court ruled it illegal.

Under the practice, when long-term students–mostly those with three-year contracts–terminated arrangements, the price of lessons already taken were calculated at higher amounts than agreed at the contract-signing.

The students received less of a refund than they expected.

When the ministry ordered Nova to suspend business June 13 under the Specific Commercial Transaction Law, it pointed out the refund method was unlawful if students attempted to terminate contracts for reasons such as difficulty in booking lessons.

However, the ministry’s June 2002 Nova document, distributed to regional ministry bureaus nationwide, noted the calculation method did not necessarily limit student rights to terminate contracts.

As Nova’s practice of calculating higher prices for lessons was actually applied to some forms of contracts, the document said, “It cannot be said the method lacks rationality.”

Nova also nullified unused points purchased by students in advance to take lessons, when students terminated contracts.

In the wake of numerous complaints on terminating Nova contracts received by consumer consultation centers, the ministry’s Consumer Affairs Policy Division drafted the document after interviewing Nova executives.

Copies of the document were distributed to the ministry’s regional bureaus, prefectural governments and consumer consultation centers, effectively allowing Nova to continue using the calculation method.

In February 2002, four months before the document’s issuance, the metropolitan government began its own administrative procedures against Nova, demanding the company review its business practices, including the refund calculation.

Other problems included false explanations to potential students that they would be able to book lessons at any time, and faulty contract forms.

The metropolitan government said Nova admitted in March that employees had made mistakes in judgment when they made sales pitches to potential students, and that Nova promised to correct the problem.

But Nova declined to discuss its refund calculation method with the metropolitan government and said it would take action after consulting the ministry.

When the ministry presented its opinion in the June 2002 document, the metropolitan government could not continue administrative procedures against Nova.

The number of complaints about Nova received by consumer consultation centers continued to increase even after the ministry issued the document.

The number steadily rose from 855 in fiscal 2002 to 982 in fiscal 2004, and to 1,088 in fiscal 2005. In fiscal 2006, the number reached 1,967, accounting for 53 percent of all complaints about foreign language conversation schools.

In September 2005, a consumer organization demanded Nova review the refund calculation method. Nova replied that it calculated prices for terminating contracts based on consultation with administrative authorities.

An official of the Consumer Affairs Policy Division said: “The government presented its view for a case that caused numerous complaints. Though the document was a reply based on Nova’s explanation that students could book enough lessons, we can’t deny it was later used for Nova’s convenience.”

Koji Niisato, a lawyer with expertise in consumer affairs, said: “It was already widely known more than 10 years ago that there were numerous complaints about Nova. As many former Nova students had to forfeit a lot of money without the chance to file lawsuits, the administrative authorities bear a heavy responsibility.”

“The [ministry’s] interpretation of the refund calculation method was denied by the Supreme Court. It’s obvious the ministry magnified the financial pitfalls endured by Nova students. The ministry can’t deny it made the judgment for corporate rather than consumer interests,” he said.

http://www.yomiuri.co.jp/dy/national/20070702TDY02007.htm

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.

The committee is expected to look into Sahashi’s responsibility and other issues related to the scandal.

http://asia.news.yahoo.com/070628/kyodo/d8q1pfhg3.html

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.

http://www.japantoday.com/jp/news/410876

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