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

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

According to the Yomiuri shimbun, Nozomu Sahsahi, NOVA's disgraced and convicted ex-president, was confined in his hotel room for three days by gangsters. The police have arrested two men, one who is a member of the Yamaguchi-gumi syndicate, in connection with the incident.

Sahashi had apparently traveled to Tokyo, and when his lawyer became unable to contact him over the weekend, he went to the police. The police found Sahashi yesterday afternoon in his hotel room in Nihonbashi where they arrested two men whom they allege held Sahsahi for roughly 3 and a half hours. The men claim that they were merely with Sahashi (and that they didn't hold him against his will).

Many will be disappointed to learn that Sahashi was not injured. The police are investigating the circumstances of the incident.

Assuming it wasn't a social call, one possible reason for the "visit" may have to do with Sahashi's mysterious stock dealings as NOVA crashed and burned around him. Desperate to come up with some cash, he put his shares in NOVA up as collateral only to be swindled out of five million of them. One name that came up in the course of the dealings was Nishida Haruo, who appears to have made a career out of stock manipulation. Perhaps Sahashi owes some bad people some money. Then again, he is arrogant enough that you could not completely rule out him demanding his shares back, either.

Yomiuri article

ＮＯＶＡ元社長を監禁容疑、組員ら逮捕

経営破綻(はたん)した英会話学校「ＮＯＶＡ」（破産手続き中）の元社長で、業務上横領罪に問われた猿橋望被告（５８）（控訴中）を東京都内のホテルに監禁したとして、山口組系暴力団員の男（３８）ら２人が、監禁の疑いで警視庁三田署に現行犯逮捕されていたことがわかった。

同署幹部によると、２人は２８日午前１１時３０分頃から午後３時頃まで、中央区日本橋蛎殻町内のホテルの一室に猿橋被告を監禁した疑い。猿橋被告にけがはなかった。

猿橋被告の弁護士が、猿橋被告と２５日頃から会えなくなったとして同署に相談していた。捜査員が２８日午後３時頃、同ホテルで猿橋被告を保護し、２人を取り押さえた。２人は「一緒にいただけ」と容疑を否認している。同署はほかに共犯者がいるとみている。

猿橋被告は、ＮＯＶＡグループの社員積立金を流用したとして、２００８年６月に業務上横領容疑で大阪府警に逮捕され、先月、大阪地裁が懲役３年６月の実刑判決を言い渡していた。

(h/t to Are they the lemmings)

No surprise here. Sahashi officially filed an appeal of his three and a half year sentence for embezzlement with the Osaka District Court on Wednesday. Typical of his defiance during his trial and ever since he was ousted from NOVA, Sahashi asserted once again that he had acted to prevent NOVA from going bankrupt.

Asahi shimbun

ＮＯＶＡ・猿橋元社長側が控訴

2009年9月3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）の弁護人が２日、懲役３年６カ月とした大阪地裁判決を不服として控訴した。猿橋元社長は「会社の倒産を防ぐためだった」と無罪を主張していた。

I take back what I said in my last post. It's not over with Sahashi. He was released on bail last night following his sentencing. The Asahi shimbun, among other papers, carried a report of the events in the courtroom yesterday. Here's a summary of that article.

Sahashi wore a dark suit as he stood in front of the judge as his sentence was read. Upon hearing he was sentenced to 3 and a half years in prison, he lifted his head slightly and then slumped into his seat as he sat down. Although he was briefly detained after the decision was read, he paid his original bail of ¥50 million plus an additional ¥10 million tacked onto it, and was released later that evening.

NOVA grew from a single school in Osaka in 1981 to to 994 schools in 2005, but after a series of problems with refunding canceled contracts, it went bankrupt in 2007.

When his trial began in June, Sahashi apologized to the students and staff for all of the trouble caused by the bankruptcy of NOVA, but under questioning, he repeatedly stated that he had no choice but to use money in an employee's welfare fund in order to save the company.

Former NOVA staff members who testified at the trial were critical of Sahashi.

A former HR manager who oversaw the employee payroll said that Sahashi kept receiving his high executive salary right up until the bankruptcy and never once offered to return it, and added that taking money from the welfare fund wasn't unavoidable.

Another former staff member in charge of accounting pointed out that NOVA's rapid expansion was causing cashflow problems, but Sahashi was putting the blame on the staff. He apparently told staff in a meeting that if the company went bankrupt, it would be their fault. Sahashi didn't want to offer a blubbering apology like the president of Yamaichi Securities did (when it went bankrupt in 1997).

After listening to testimony during the trial, Sahashi irately told reporters that the facts were wrong and mixed with speculation.

Sahashi's lawyers, who had emphasized that he had poured over ¥600 million of his own money into the company, thought the court's ruling was terrible.

Toyomi Ashida, a 60-year old former NOVA student still waiting for a refund of approximately ¥300 thousand, said that the sentence was fair given that Sahashi selfishly used money that belonged to the employees, but was dismayed that he was no closer to recovering his money.

Many expected the trial would reveal Sahashi's thinking and why NOVA went bankrupt, but were disappointed to only receive a standard apology.

According to lawyers representing a group of former students, roughly 300 thousand students across Japan are still waiting for some ¥56 billion (nearly $600 million USD) in refunds. Ashida and 23 other former students filed a class action lawsuit against Sahashi and NOVA management last October for ¥16 million. They are hoping to question Sahashi went the lawsuit goes to trial.

Sahashi was arrested for embezzlement by the Osaka police last June, eight months after the collapse of NOVA. While he was also investigated for aggregated breach of trust for causing huge losses to NOVA, not enough evidence was found to indict him. NOVA's bankruptcy trustees, however, have long believed that the dealings that caused the loses were shady and filed suit last week seeking ¥2.1 billion in damages.

Comment: That sound you hear is the collective screams of disbelief at Sahashi being released on bail. Sahashi has indicated that he will appeal the ruling, so it's not uncommon for non-violent offenders to be released pending their appeal. More importantly, his legal woes are far from over. Even if he manages to win his appeal and get a suspended sentence, there are two more lawsuits against him. He's going to be in court for a long time. Sahashi has maintained that all he was doing was trying to save the company and repay students and staff, but that money, and hopefully the truth, is now going to be extracted from him the hard way.

Asahi shimbun

ＮＯＶＡ判決　ワンマン手法重視　元受講生「実刑当然」

2009年8月27日

かつて６千人を超す社員や外国人講師を抱え、全国展開を遂げた英会話学校「ＮＯＶＡ」。その経営トップに立ち、社員の積立金を流用したとされる元社長の猿橋望被告（５７）に、司法は「実刑」の厳しい判断を示した。元社長は沈痛な表情で判決を聴き、元受講生からは「当然」との声も上がった。

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「すべて裁判官の前で説明した。あとは正しく判断してもらうことを信じて待つしかない」。昨年７月に保釈保証金５千万円で保釈された猿橋元社長は判決前、周囲にそう語ったとされる。

しかし、裁判長が告げた主文は実刑判決。黒っぽいスーツ姿で直立していた猿橋元社長はわずかに顔を上げ、裁判官席をじっと見据えたが、着席すると肩を落とし、終始うつむいて判決理由を聞いた。約４０分の言い渡し後、いったん勾留（こうりゅう）されたが、２６日夕方、保証金１千万円の追加で再度の保釈が認められた。

８１年、大阪・心斎橋に第１号を開校。「駅前留学」「お茶の間留学」といったキャッチフレーズを打ち出し、０５年には９９４店にまで店舗を広げ、ワンマン経営の組織を作り上げた。だが受講生と解約をめぐるトラブルが続き、資金繰りが悪化し、０７年に破綻（はたん）した。

６月の初公判。元社長は「倒産で多くの生徒や社員に多大なご迷惑をかけたことを深くおわびします」と頭を下げた。だが被告人質問では、社員の積立金を使ったことは会社存続のためやむを得ない判断だったと繰り返した。

組織につかえた元社員らは、証人に立ったこれまでの法廷で元社長を批判した。

社員の給与を管理していた元人事管理課長は「破綻の直前まで高額な役員報酬を受け取り、自ら返上しようとはしなかった。流用がやむを得ないとは思わない」と語った。

元経理課長は「急激な拡大路線で資金繰りが追い付かなくなった」と指摘。元社長が社内の会議で「会社が破綻した場合は君たちの責任だぞ。私は（９７年に破綻した）山一証券の社長みたいに泣くのは嫌だぞ」と発言したという話を明かし、「部下に責任を押しつけた」と述べた。

被告席の猿橋元社長は顔をこわばらせて証言を聴き、閉廷後に「事実とは異なる」「憶測が混じっている」と報道陣に憤ることもあった。

２６日の判決後、個人資産６億円以上を会社に投じたことを強調していた元社長の弁護人は「ひどい判決だ」と不満を述べた。

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実刑判決について、授業料約３０万円が返還されずにいる元受講生で京都市に住む介護施設職員、芦田豊実（とよみ）さん（６０）は「社員の金を勝手に使ったのだから当然だ。ただ、授業料が戻ってくるわけでもなく、むなしい」と話した。

元受講生にどんな思いでいるのか、なぜ会社を破綻させてしまったのかを、元社長が公判でどう語るかに期待していた。「結果的には型通りの謝罪だけで終わってしまった。残念でならない」

元受講生の被害対策弁護団によると、授業料が返還されていない元受講生は全国に約３０万人、その額は約５６０億円にのぼる。芦田さんら元受講生２４人は昨年１０月、元社長を含む当時の経営陣らに授業料など計約１６００万円の賠償を求める初の集団訴訟を大阪地裁に起こした。今後、訴訟で元社長の証人尋問を求めることも検討したいという。

猿橋元社長は破綻から約８カ月後の昨年６月、大阪府警に今回の事件で逮捕された。府警は、元社長が関係先との不当な取引でＮＯＶＡに多額の損害を与えたとみて、特別背任容疑も視野に捜査したが、違法性を裏付ける証拠が集まらず立件は見送られた。破産管財人は今月１９日、この取引をめぐって元社長に約２１億円の賠償を求める訴訟を大阪地裁に起こしている。

I'll keep this short and sweet: The court found Sahashi guilty of embezzling money from NOVA's employee welfare fund and sentenced him to three and a half years in jail.

According to the ruling, on July 20, 2007, Sahashi withdrew ¥320 million from NOVA's shayuukai welfare fund, converted it into cheques, and then deposited the money into an account held by NOVA Kikaku, a company that he controlled.

You will recall that Sahashi admitted to pilfering the fund, but since he was using the money to refund canceled contracts, his lawyers maintained that he did nothing illegal.

The Mainichi article ends with a few factoids about NOVA, the most important being the debts it had:¥86 billion ($913 million USD at current exchange rates). That's money that students and instructors will probably never see again.

The drama surrounding Sahashi is over for now. Three and a half years is probably not nearly enough for those who experienced NOVA's collapse.

Mainichi shimbun

ＮＯＶＡ破綻：猿橋元社長に懲役３年６月　大阪地裁判決

経営破綻（はたん）した英会話学校「ＮＯＶＡ」（破産手続き中）の社員積立金を流用したとして、業務上横領罪に問われた同社元社長、猿橋（さはし）望被告（５７）に対し、大阪地裁（樋口裕晃裁判長）は２６日、懲役３年６月（求刑・懲役５年）の実刑判決を言い渡した。

　判決によると、猿橋被告は０７年７月２０日、ＮＯＶＡグループ社員の互助組織「社友会」の預金口座に積み立てられた３億２０００万円を別口座に入金。同額の小切手に換え、関連会社「ノヴァ企画」の口座に入金し、横領した。

　猿橋被告は公判で「事実関係は間違いないが、社員積立金を使ってはいけないという意識はなかった」と述べ、弁護人は「生徒への解約払戻金を支払うためで、不法領得の意思はなく、業務上横領罪にはあたらない」と無罪を主張していた。

猿橋被告を巡っては、ＮＯＶＡの破産管財人が今月１９日、「不要な取引を繰り返し、損害を与えた」として、約２１億３６００万円の賠償を求める訴えを大阪地裁に起こしたほか、６月には特別背任罪で大阪地検に刑事告発している。

ＮＯＶＡは８１年、前身の「ノヴァ企画」として猿橋被告が創業。一時は全国に約１０００店舗を構えたが、中途解約をめぐるトラブルなどで資金繰りが悪化し、０７年１０月に破綻。受講生約３０万人が前払い受講料の払い戻しを受けられなくなるなどの被害を受けた。負債総額は約８６０億円だった。猿橋被告は昨年６月に逮捕され、翌月に保釈保証金５０００万円を納め、保釈された。【牧野宏美】

毎日新聞　2009年8月26日　14時51分

The legal woes of former NOVA president Nozomu Sahashi aren't about to let up. While a decision on his current trial is due to be handed down on August 26, the trustees overseeing NOVA's bankruptcy have sued him for aggravated breach of trust, seeking ¥2.1 billion (roughly $22.6 million USD) in damages over the sale of videophone units by Ginganet, a company in which Sahashi was the sole share holder, to NOVA.

The lawsuit claims that between 2004 and 2006 NOVA purchased 25,600 videophones it didn't need from Ginganet despite there being a sufficient number of videophones in stock for students to use for ocha no ma ryuugaku lessons. The trustees claim that Sahashi had personally guaranteed the debts of Ginganet and other NOVA affiliates, and that he diverted funds from NOVA by charging the company for unnecessary videophones in order to pay back the debts of the affiliates.

This lawsuit looks like it's out of the blue, but it appears to have roots in the aftermath of NOVA's collapse in 2007. Immediately after the collapse, the trustees charged that Sahashi fleeced NOVA by charging the company several times the list price for videophones. The trustees believed Sahashi was up to no good since it was suspicious that he would overcharge NOVA for the videophones when he was in control of both companies, and then later sell his stake in Ginganet. When the Shukan Diamond interviewed him, he flatly denied the accusation.

I think very few people believe Sahashi when he says he's sorry for what he's done and wants to make amends. This new lawsuit drives a stake through his credibility. Sahashi has long maintained that he was doing everything in his power to save NOVA and get students their refunds. Now we learn that years before NOVA started to implode, he was funneling money out of his companies in order to line his own pockets.

Yomiuri article

ＮＯＶＡ元社長に２１億円賠償請求　管財人が提訴

2009年8月20日

経営破綻（はたん）した英会話学校「ＮＯＶＡ」（大阪市）の元社長、猿橋望（さはし・のぞむ）被告（５７）＝業務上横領の罪で公判中＝が関係先との不当 な取引で会社に多額の損害を与えたとして、ＮＯＶＡの破産管財人が１９日、猿橋元社長に約２１億３６００万円の賠償を求める訴訟を大阪地裁に起こした。

訴えによると、猿橋元社長は０４～０６年、受講生が自宅で授業を受ける「お茶の間留学」に使うテレビ電話の在庫が十分あったのに、元社長が実質支 配する関係会社「ギンガネット」から２万５６００台を余分に購入するなどしたとされる。破産管財人は「元社長はギンガネットなど関係会社の債務を個人で保証しており、その返済のために必要のない機材の代金名目で関係会社に資金を流入させた」と主張している。

この取引をめぐって、破産管財人は６月、猿橋元社長を商法（現・会社法）の特別背任の疑いで大阪地検に告発したという。

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。

Terrie Lloyd's column in Japan Today is supposed to be a look at the state of eikaiwa in Japan, but it's a poor effort stuffed with meaningless business-speak. Teaching English has been on a downward slide ever since Japan's asset bubble burst. The collapse of NOVA only served to make things worse. Let's take a look at the column.

Last week, the ex-president of Nova Corporation, once Japan's largest English school chain, was in court to answer charges of embezzlement prior to the failure of his company. According to the prosecutors, Nozomu Sahashi diverted about 320 million yen ($3.3 million) from Nova to pay student fee reimbursements of a related company.

Quibble: the trial began on June 1st and is slated to end on July 3rd. The way this is written, it sounds as if the trial started last week.

To be honest, I'm surprised that this is the worst thing the prosecutors could come up with, because moving money between companies is common practice for conglomerates, especially if related firms are in trouble. Indeed, it's as simple, and legal, as making an inter-company loan. Maybe he didn't do the paperwork and so there is a case to answer for, but I'd be surprised if it will amount to prison time.

I think a lot of people are surprised that Sahashi was arrested for embezzlement given his shady stock dealings and the autocratic way in which he ran NOVA. Sahashi may not spend much time inside a jail cell, but he is ruined. After this trial is over, he will have to face the civil suits against him.

That said, referring to embezzlement as a paperwork error is a glib dismissal of the crime. Companies can, of course, move money around, but this ignores the relationship of Sahashi to the money. He ruled owned NOVA and pulled all of its strings. He also held ownership in NOVA Kikaku, which was run by a relative. Nova quickly ran out of cash after METI sanctioned the company and had nothing in its coffers to pay employee salaries and reimburse the torrent of canceled lesson contracts. Moreover, the money Sahashi took belonged to an employee welfare fund, and he raided the fund after colluding with a manager without bothering to consult with his board or the staff. It's difficult to say how his actions constitute a loan especially when the money was not his to use in the first place. What he did was rob Peter to pay Paul. It was no clerical error.

What's interesting is that if you look at the companies remaining in the market since Nova imploded, none of the majors seem to been able to step in and steal significant market share. Indeed, by my estimates, the five largest schools between them probably don't teach more than 500,000 students and thus I can see that the industry is highly fragmented. This is quite unusual in Japan, where normally there is one massive incumbent taking a 70%-80% market share, then leaving mere scraps for everyone else.

This fact tells me that no one so far, including Nova earlier, has figured out how to systemize the English-teaching business, and that there are lots of students who appear to be happy studying in smaller schools. Perhaps the human element of local teachers you know and trust is still very important. Or perhaps it means that Japanese business owners and managers haven't figured out yet how to extract the best business growth and financial results from their foreign teacher employee base.

I'm sorry, but "none of the majors seem to been able?" Moving on, "there are lots of students who appear to be happy studying in smaller schools" is almost laugh-out-loud funny. People are happy studying at smaller schools? Impossible! And what does it mean to "extract the best business growth and financial results from their foreign teacher employee base?" Why does English teaching have to be systemized and run by a large company, anyway? The collapse of NOVA is like the asteroid that killed the dinosaurs. The little schools are picking up the crumbs of NOVA and thriving. There's nothing wrong with this. There is something to be said about learning English at smaller, more personal schools--they generally pay better attention to their customers.

For example, right now the marketing focus of most schools is on cheaper lessons and variations of private lessons and smaller classes. This is all well and good, but smaller classes are not cheap to do, so using simple Psych 101 theory, it would follow that popular teachers should be trying to convince their students that better quality learning means more one-on-one teacher time, and thus higher fees. I appreciate that many teachers may not see themselves as salespeople out to extract more value from their students. However, if some enterprising CEO could come up with a strategy that allowed popular teachers to overcome this reluctance, then with the right in-house training and incentives, that school could be pulling in much better margins and therefore grow more quickly.

More business gobbledygook. How do you extract more value from students? Sell them more lessons with a slick PowerPoint presentation? Pick their pockets? The bit about getting teachers to be salesmen is nothing more than a rehash of the way GEOS and AEON already do business. Here's where the analysis falls flat. It focuses too much on the financial viability of schools while ignoring the elephant in the room--that the large eikaiwas are, on the whole, poorly managed and terrible places to work. They are set up to reap maximum profit, not educate.

The problem with eikaiwa goes beyond money and trying to find the right strategy, and has everything to do with delivering quality. Sadly, the large schools aren't interested in this. Instead, they treat instructors as unskilled labour. Instructors work for low pay, generally have no healthcare plan, have little opportunity for professional development, have few benefits, and have even less job security, but are expected to look and sound professional at all times. It's all about making a buck off selling time with English-speaking foreigners.

Using Berlitz and GABA as being representative of the entire industry is too simplistic. The author himself even says that the English teaching market is extremely fragmented, so looking at Berlitz's and GABA's numbers tell us about the health of the respective companies and nothing about the industry as a whole. By this metric, had Mr. Lloyd been writing about eikaiwa when NOVA was at its peak, he might have praised NOVA as a paragon of business for its high revenue stream, venture into videophones, slick advertising, and aggressive expansion policy. The numbers tell us that the schools are not very healthy, but we also need to consider what is happening on the ground.

Berlitz could have the best teaching methodologies in Japan, but the fact that they are suing some of their teachers for trying to unionize exercising their right to strike and are stalling for time suggests that they don't care about them. GABA is equally dodgy. It is more of a middleman than school, and as a result, it's "partners" work at "studios" for no guaranteed salary, no paid holidays, or any other benefits.

The pressure sales tactics used by the schools to vacuum as much money out of students' pockets, the poorly trained instructors working in even poorer conditions, and the mistrust of the whole operation by students combine for a perfect storm that David McNeil describes as an industry rigged for implosion. It's no wonder the industry is in decline because it is completely lacking in credibility.

How about this for a radical idea? Make eikaiwa about education. Set standards. Have strict curriculums. Hire instructors with qualifications and treat them with respect, and pay them a decent salary. This may be a pipe dream, but it makes a lot more sense than "pulling in much better margins," or trying to "extract value" from students. The large eikaiwas might be surprised to learn that delivering a quality product leads to financial success.

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。