Photo/Illutration The building housing the headquarters of the main companies in the Japan Post group (Asahi Shimbun file photo)

The Japan Post group of companies cleaned house with a new lineup of executives on Dec. 27 as regulatory bodies issued disciplinary measures related to a scandal involving Japan Post Insurance Co.'s shady sales of policies.

The Financial Services Agency issued the business suspension orders to Japan Post Insurance and Japan Post Co., which sells the insurance policies through its network of post offices around Japan.

The orders, which cover some of the business operations of the two companies, will extend for three months.

The two companies will be banned from having employees solicit new policyholders. But because Japan Post provides a range of services offered by the Japan Post group, its post offices can handle sales of Japan Post Insurance policies if customers ask to sign up.

The other policies handled at Japan Post outlets, such as those offered by Aflac Life Insurance Japan Ltd., will not be affected by the suspension order.

Moreover, the FSA also ordered Japan Post Holdings Co., the parent company, to improve its corporate governance of group companies in the wake of the revelations that thousands of insurance policies were sold using questionable methods.

In its orders, the FSA demanded that the Japan Post group make clear its corporate responsibility for the questionable sales practices.

Subsequently, the top executives of Japan Post Holdings, Japan Post Insurance and Japan Post were scheduled to hold a news conference on the evening of Dec. 27 to announce their intention to step down.

Expected to resign are Masatsugu Nagato, president of Japan Post Holdings; Mitsuhiko Uehira, the Japan Post Insurance president; and Kunio Yokoyama, the Japan Post president.

Hiroya Masuda, a former internal affairs and communications minister who also once served as chairman of the Japan Post privatization committee, is expected to be named as Nagato's successor.

The FSA investigated sales practices at the Japan Post group from September until Dec. 13. It found a large number of legal violations as well as the frequent breaking of company regulations. The investigation also revealed excessive sales quotas placed on post office employees, a corporate culture that downplayed the interests of customers as well as an insufficient emphasis on corporate governance.

The agency decided that a certain period of time was required to allow the Japan Post group to implement measures to prevent a recurrence as well as to deal with the complaints of customers.

While the nomination committees of the three companies will formally name the successors to Uehira and Yokoyama, several government and ruling party sources said that those being mentioned are Tetsuya Senda, Japan Post Insurance deputy president, to take over from Uehira; and Kazuhide Kinugawa, a senior managing executive officer at Japan Post Holdings, to take over as Japan Post president.

Both Senda and Kinugawa are former bureaucrats who once worked in the former Ministry of Posts and Telecommunications. Masuda also worked as a bureaucrat in the former Construction Ministry.

The new executive lineup will be filled with former bureaucrats, a sharp change from their predecessors, who were all from the private sector.

Meanwhile, Yasuo Suzuki, senior executive vice president at Japan Post Holdings, will also resign his post. He received information about disciplinary action being considered by the Ministry of Internal Affairs and Communications from the administrative vice minister, which led to the effective dismissal of that top bureaucrat in the ministry.