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

In Japan, that test is supposed to be TOEIC, the Test of English for International Communication, which turns 30 this year. The Japan Times has a two-part series on the test, starting with a brief history.

Today, people in more than 90 countries take the TOEIC about 5 million times a year. South Korea is the only other country sharing Japan's enthusiasm for the test. About 80 percent of TOEIC test-takers live in Japan or South Korea. Elsewhere it remains largely unknown. For example, a recent survey showed that the TOEIC was the least known test of English proficiency in Germany, with only 2.8 percent of schoolteachers having even heard of it.

I had no idea that it was a made-in-Japan test and that the vast majority of test-takers are Japanese and Korean (which shows you how much I know).

The last paragraph caught my attention:

Yoshida was unable to speculate on TOEIC's future in Japan, but the IIBC chairman's blog provides a clue. Watanabe believes that every junior and senior high school should adopt the test for the good of the nation, writing, "Just imagine what it would be like if TOEIC spread to junior high and high schools all over Japan. The results would astonish people around the world. Japan would rise like a phoenix from the ashes, and Japanese women and men would begin to play more important roles on the international stage."

Where to start with this? Imagine if Japan could stun the world with its TOEIC results. They might be able to have the second largest economy in the world and be a leader in high technology. Oh, wait, that already happened without the test. I suppose I can't blame Watanabe for thinking big, but I'll be impressed when they fix the utterly broken approach to teaching English in school.

It's getting close to Obon, so it's time for a ghost story.

Yano Research has released its latest survey of the foreign language market, which shows that the market is still in decline.

The two key findings are:

• The foreign language market was worth ¥767 billion in FY2008, a contraction of 5.2% compared to the previous year.
• The market is forecast to contract further in FY2009 but growth is expected in children's lessons and in language testing.

Blue line shows foreign language market. Magenta line shows foreign language market minus peripheral businesses such as testing, homestays, and translation and interpretation.

Take a wild guess as to why this is so. OK, pencils down. The answer is: NOVA, although the company is not explicitly named. For some reason, in their summary of the survey [PDF], Yano Research tip-toes around NOVA, attributing the decline to a lingering distrust caused by the bankruptcy of the industry's top school in October 2007　(当時業界トップであった事業者が 2007 年 10 月に破綻した影響).

Still, they believe the market will slowly recover and stabilize. The summary notes the following positive trends:

• Demand for children's English lessons is strong due to more interest in early English education.
• Increased demand for language skills has boosted the language testing market.
• The market for learning materials has been boosted by sales of bestselling books like US president Obama's speeches.
• Although the market for English lessons for adults shrank by 9.1% compared to the previous year, private (man-to-man) lessons are going strong due to corporate demand and segmentation of the market to meet business needs.

Yano Research forecasts that the current economic downturn will hurt many in the foreign language business and expects the foreign language market (including peripheral businesses) to fall another 3.7%. They see things improving in the medium term as elementary schools are slated to make English a compulsory subject in 2011, which should also boost demand for children's lessons. English lessons for adults are also expected to improve as demand for corporate lessons remains strong.

So there you have it -- NOVA still haunts Japan from its grave.

The Yomiuri shimbun and other news agencies are reporting that president of G.communication, Masaki Inayoshi, has failed to report ¥500 million (about $5.2 million USD) in income. The unreported income comes from him selling 230 shares in G.communication in 2007. Inayoshi reported the sales of some shares in 2006, which led the National Tax Agency to believe that his failure to report the income this time was intentional.

The story doesn't end there. The NTA audited 10 other G.communication group companies and found that they have failed to report some ¥1.5 billion ($15.8 million USD) over the past several years. Some of the companies were apparently in the red and could pay their taxes.

reports that the NTA says Inayoshi owes ¥100 million ($1 million USD) in back taxes and other charges.

The numbers in the Chunichi shimbun are a bit different. It reports that the NTA assessed 13 G.communication group companies ¥295 million in back taxes for failing to report income over the past 5 years. ¥170 million of this stems from G.food and its opening of several restaurants. The NTA also told G.education that it was not allowed to list ¥30 million in airfare to help foreign instructors return home as a loss. (　一方、同社とグループ会社の計１３社も昨年決算期までの５年間に申告漏れがあり、計２億９５００万円を追徴された。うち「小樽食堂」「ハイカラヤ」などを展開する「ジー・フード」社の追徴額が約１億７０００万円だった。「ジー・エデュケーション」は旧ＮＯＶＡを引き継いだ際、帰国できない外国人講師に支給した飛行機代約３０００万円を損金としたが、同国税局から損金に当たらない交際費だと指摘されたという。)

Other reports, like this one in the Iwate shimbun shed some more light on G.education's exaggerated accounting practices. You will recall that G.education took in refugee NOVA students and only charged them 25% the normal lesson fee as an incentive to continue studying. G.education booked the discount as a loss and apparently did the same when it signed up new students. (うち１社はＮＯＶＡの英会話教室事業を引き継いだ教育会社。ＮＯＶＡに受講料を支払ったまま授業が受けられなくなった元受講生への「救済策」として受講料 を割り引く優遇制度を適用。割引分は同社の「損金」として計上してきたが、優遇制度の対象とならない新規の受講生の受講料についても同様の会計処理をして おり、国税局は損金を過大に計上した可能性があるとみているもようだ。 )

Inayoshi, however, denies that he was intentionally hiding income.

That Inayoshi has found himself in trouble with the authorities is nothing new. Shortly after G.communication took over NOVA, The Japan Times reported this:

The aggressive [expansion] strategy has at times led to shady deals that have caught the attention of the government.

In October 2006, the Financial Services Agency ordered G.communication to pay a ¥390,000 fine for insider trading after purchasing shares of one of its subsidiaries that was planning a capital increase before the information became public.

This isn't the first time he's been caught. It's tough to say how this run-in with the taxman will affect G.communication, but it's certainly the kind of attention the company doesn't want. It is, however, is another example of how shoddy and shady management is par for the course in eikaiwa.

Yomiuri article

経営破綻(はたん)した英会話学校大手ＮＯＶＡの事業を引き継いだ「ジー・コミュニケーション」（名古屋市北区）グループの稲吉正樹代表（４０）が、自社株の売却益を申告しなかったとして、名古屋国税局から約５億円の所得隠しを指摘されていたことが２日、わかった。

また、グループ会社約１０社も同国税局の税務調査を受け、２００８年決算期までの数年間で総額約１５億円の申告漏れを指摘された。

関係者によると稲吉代表は０７年、ジー社株約２３０株を売却し、約５億円の利益を得たが申告しなかった。０６年に売却した際は申告していたことから、同国税局は「意図的に申告しなかった」と判断したとみられる。

グループの教育会社は、旧ＮＯＶＡへ支払った受講料の約２５％を追加した場合、受講を継続できる優遇策を設けていたが、この受講料の経理処理などについても、同国税局から是正を求められたとみられる。

信用調査会社によると、ジー社は１９９７年設立で、今年３月期の売上高は約２５億円。稲吉代表は「国税局から申告漏れを指摘されたが、意図的なものではなかった」とのコメントを出した。

The Yomiuri Shimbun, via Yahoo!, has a story about the dark underbelly of ALT dispatch companies as English will become a compulsory subject in the fifth and sixth grades in 2011.

For example, schools have to deal with the constant turnover of ALTs. One BOE member in Saitama related that he is on his 4th ALT quit since April. This revolving door of teachers is not conducive to learning.

A contributing factor to the revolving door are the dispatch companies themselves. The low salaries ALTs receive guarantees they won't be around for very long. A principle in Saitama noted that the dispatch company that won the contract for his school placed a bid that was ¥310,000 per ALT lower than the bids last year.

Figures from the education ministry show that 25% schools use the JETs while the remainder rely on dispatch companies. The principal in Saitama adds that his city has a contract with a dispatch company to provide approximately 20 ALTs to more than 40 elementary, junior, and senior high schools, and knows that the company has cut the salaries, bonuses, or in some cases both, of ALTs who missed half a day due to illness. He says that he will no longer be able to provide quality education if the number of unscrupulous dispatch companies increases.

The increase in dispatch companies took a noticeable leap in 2006 when it was announced that English would be a compulsory subject in elementary schools. But this was when ALTs in the JET Programme were directly hired. An increasing number of school boards now don't want to be bothered with having to hire, house, or find replacement ALTs, which is why they find dispatch companies so appealing.

The problems described in the Yomiuri article are further illustrated in a news special on ALTs. Like their Japanese counterparts, contract teachers have zero job security. Part 1 starts with Lara, who came to Japan to study pottery. She's teaching twice a week, and lucky for her, she is directly employed by her BOE. She is one of the lucky ALTs. She loves her job and the kids like her lessons. Then there are the less fortunate ALTs like Robert, who was summarily fired from his job 5 months before his contract expired. His lunch consists of bean sprouts and a small cut of salmon. He has to pinch his pennies because he hasn't found another job. When he tried to get an answer from his dispatch company as to why he was dismissed, they told him that the BOE wanted a change in ALTs. To illustrate how bad the conditions are, the news program asked a room of parents and students if their ALT had ever changed during a year. They answered, "Yes," with one boy saying he had 7 or 8 different teachers.

In part 2, we're treated to more problems. Eric has no savings and made only ¥112,000 in December and ¥150,000 in January. Although he's been working for 3 years, he's been on 6-month renewal contracts. He hasn't been paying into shakai hoken because his dispatch company told him that since he teaches fewer than 6 hours a day, they can't enroll him. His contract, however, shows that he works 8 hours a day.

His contract with the dispatch company is illegal. The problem is that while the schools are supposed to go through the dispatch company when giving orders or instructions to an ALT, this doesn't happen simply because the ALT is in the school and its easier to give instructions directly. Under the law, the schools should be directly employing ALTs.

A survey done by the news program shows that of the 62 cities they surveyed, 51 BOEs had contracts with dispatch companies. If the education ministry understands that these kinds of contract arrangements are illegal, why are ALTs working under them? The answer comes down to money. The BOEs don't have any, so they look for the cheapest dispatch company. The education ministry, however, appears to have no idea as to how many ALTs are working under this conditions, but plans to investigate.

Comment: The school boards want English to be cheap, fast, and, good but don't realize that they can only pick two of these options in real life. If BOE's want continuity and good lessons, they're going to have to pay for it, but they don't appear to have the budget for this.

The article and the news report illustrate how utterly broken English education is in public schools. Fixing this problem should be straightforward but the BOEs have no money and the education ministry is dragging its feet even though it's aware ALTs are working under illegal contracts.

With NOVA gone, I think it's fair to say that ALT dispatch companies can lay claim to being the worst in the business. They are truly bottom of the barrel.

(video via the General Union)

Update: A subtitled version of the report can be found at .

Yomiuri article

小学英語、外国人の指導助手巡る問題山積

7月28日14時54分配信 読売新聞

２０１１年度から必修化される小学５、６年生の英語の授業について、文部科学省が全国の公立小学校約２万１０００校などを対象に調査を実施したところ、昨年度に小学校で実施された英語授業のうち７割近くで外国語指導助手（ＡＬＴ）が活用されていたことがわかった。

　生の英語を学ぶ機会が定着してきたことが浮き彫りになった形だが、一方では、簡単に授業を投げ出してしまうＡＬＴもいるなど、“質”の問題が浮かび上がっている。

「また辞めるのか」。７月中旬、埼玉県内の市教育委員会の担当者は、業者から米国人ＡＬＴが交代するとの電話連絡を受け、頭を抱えた。４月以降、辞めるのは３人目。１人目は「通勤時間が長い」と小学校に現れず、２人目と３人目は「一身上の都合」などを理由に、１学期の授業だけで、学校から消えた。２学期からは４人目が来る。担当者は「継続性が大事なのにこんなに交代するなんて。児童たちにも説明ができない」と困惑する。

　「人件費を切りつめるから辞めてしまうんだろう」と、埼玉県内のある学校長はうち明ける。この学校のＡＬＴ派遣を請け負った業者は、入札で、昨年の業者に比べてＡＬＴ１人あたり３１万円も安く落札した。

文部科学省によると、ＡＬＴを活用した小学校の授業のうち、国が仲介する「ＪＥＴプログラム」によるものが２５％で、残りは民間業者への委託など。

この市の場合、４０余りの小中学校にＡＬＴ約２０人を派遣する民間業者と契約を結んだが、校長は「風邪で半日休み、給与とボーナスを両方カットされたＡＬＴもいた。なりふり構わぬ業者が増えれば、教育の質は保てなくなる」と危機感を募らせた。

関係者によると、業者の新規参入が目立つようになったのは、小学校英語の必修化が打ち出された０６年ごろから。かつてはＪＥＴプログラムで採用したＡＬＴを自治体が直接雇用するのが主流だった。

しかし、自治体側はＡＬＴが住むアパートを契約したり、交代要員を確保したりしなければならない。民間業者に委託すれば、こうした手続きは不要になるため、業者を活用する自治体が徐々に増えてきた。

The Japan Times has a good summary of the issues surrounding the changes to the visa renewal process starting in April 2010. I blogged about this a while back, but the Japan Times column covers some of the implications of having to enroll in an insurance scheme in order for foreigners to renew their work visas.

Louis Carlet, deputy secretary of Nambu, laid it down for everyone in the room to understand. There are a few basic things that all foreigners in Japan have to know, he explained: first, that everyone over the age of 20 in Japan is required to enroll in an approved Japanese government health insurance scheme and pension fund. If you are under 75 and working at a company that employs more than five people, this most likely means the shakai hoken (social insurance) program; if you are unemployed, self-employed or retired, the equivalent system is the kokumin kenko hoken and kokumin nenkin (national health insurance and pension). The only people exempt are sailors, day laborers, and those working for companies employing less than five people, or for firms without a permanent address (e.g. a film set).

The two systems cover different ground, all of which is explained in detail at www.sia.go.jp/e/ehi.html. Roughly, shakai hoken consists of two parts: kenko hoken (health insurance), which covers 70 percent of your medical costs and 60 percent of lost wages due to illness, and kosei nenkin (pension insurance), which provides a pension after age 65 for those who have paid into the system. The two are inseparable, and anyone enrolled in shakai hoken through their employer automatically pays into both. The kokumin kenko hoken (national health insurance) and kokumin nenkin (national pension) package offers similar coverage but is not provided through an employer.

The bottom line is that all residents of Japan (except those mentioned above) have to be enrolled in one or other of the two systems. The revised visa laws, therefore, should pose no threat to anyone's visa renewal, because every foreigner in Japan should already be enrolled.

It has long been standard practice within eikaiwa to skirt enrollment of instructors by limiting the working hours in contracts. For example, the contracts Chris and I signed back in the day stated that we agreed to teach up to 28 hours of classes a week. The 28 hours is important because the law stipulates that companies must enroll employees in shakai hoken if the employees work 30 or more hours a week.

In 2005, NOVA brazenly changed working conditions by shortening lessons to 40 minutes and adding 2 minutes of "planning" on either side of each lesson. The net result was more unpaid free tie between classes and instructors working fewer than 30 hours per week. It was a move that supposedly saved NOVA at least ¥1 billion a year in insurance contribution payments.

Enrollment in social insurance is not without its drawbacks. Many would question the wisdom of having approximately ¥30,000 deducted from their paychecks every month, especially if they know they won't be living in Japan long enough to collect a pension. Moreover, if you've never paid into shakai hoken, you may wind up paying up to 2 years in back contributions.

That said, the benefits outweigh any initial pain. For one, you will be enrolled into a health and pension plan you are legally entitled to, and you'll avoid looking foolish like the people at the beginning of the article who didn’t know anything about social insurance in Japan or were dissuaded from joining it.

There is also recognition. Recognition that you are a full-fledged employee entitled to the same benefits as other Japanese workers. This could translate into better working conditions and improved job security. Most importantly, you are covered. No more worries about hospital visits and fewer worries about pension contributions. As the article points out, pension contributes can be refunded, but the maximum amount tops out at 3 year’s worth of contributions.

That doesn’t mean all is lost for long term residents, however. You need to check with your government and find out if it has a pension agreement with Japan. For example, Canada and the UK have them, meaning that contributions paid in Japan count toward your pension back home.

This is a positive development for workers, but it does make you wonder what took so long for this to become a reality.

This should be a story about a candidate for the Darwin Awards:

With a belly full of food and sake, Armand Nelson Schneider just wanted to get rid of his nausea and empty his stomach before hopping on a train back to his study-abroad home in Yokohama, Japan.

Schneider, 22, was throwing up over the platform when a high-speed commuter zoomed into the station and smashed into him.

Fortunately for Armand, someone pulled him back just enough to save his life. Unfortunately, the train hit him so hard that it's left him a little delusional:

"It's a miracle," his mother said. "This kid should be dead."

Schneider said he doesn't struggle with alcohol and has always been a safe drinker -- his mother calls him "Mr. Responsibility."

"There's no denying I was very drunk," he said. "But I don't think the accident was caused by that."

Riiiight. Alcohol had nothing to do with sticking his head over the tracks and puking. But the point is not to ridicule Armand. Rather, this passage caught my eye:

His recovery, however, wasn't as fast as he had hoped. Schneider stayed in the Japanese intensive care unit for 12 days, kept his spot in the ward for four weeks and was moved to a nearby rehab facility for another four weeks. Nelson stayed by his side -- along with the Japanese nurses and doctors who "fell in love with him" -- for a month.

Endless droves of friends and his Japanese family members visited him often. His Oregon study-aboard peers folded him 1,000 origami cranes, following an ancient Japanese fable symbolizing a speedy and safe recovery.

Nelson returned to the United States after "I saw him get out of that hospital and go upright." When she returned to Japan weeks later, the doctor gave Schneider the surprise go-ahead to return home with his mother.

Nelson said she was prepared to make a hefty payment -- above $300,000 -- for the months of care. Instead, she said, they informed her of the national health care system and asked her for about $3,000.

"Twelve days in the ICU would have cost a quarter million in the United States," she said.

There were some trade-offs for the less-expensive treatment, Schneider said. For instance, he had to pay for meals and to use the TV and refrigerator. He also had to share a bedroom with six people, and pay for his pajamas and diapers.

"But you're happy not to have the frills to walk out with no bills," Schneider said.

And, he said, his treatment was unparalleled.

"I thank God he was in Japan when this happened," Nelson said.

The United States is currently grappling with health care reform that would introduce some kind of universal coverage, with Canada's system frequently held as an example. The typical arguments against universal coverage range from 1) it's run by the government and therefore bad, 2) long wait times for elective surgery, and 3) it costs too much. These "arguments" are all silly. First, the Canadian government doesn't run health care, it pays for it. Doctors bill the government and doctors what treatment to give. At no time does the government step in and decide who gets treatment and who does not. Wait times are an issue in the Canadian system, but waiting for an elective procedure is far better than not getting any treatment at all. Costs, too, are always an issue, but even though there are more Americans without health care than there are Canadians covered, Canada still manages to spend less per capita than the United States.

Had this accident occurred in the US, the mother would probably be paying off the bill for the rest of her life. As a Canadian, I can't figure out why the US hasn't gotten around to adopting universal health care. This accident seems like a good reason for it--you shouldn't have to face financial ruin to get medical treatment.

(via FG)

The eco-point program is now officially underway with the government accepting applications:

Under the Eco-point system, those who buy designated energy-saving appliances between May 15 and March 31 will be eligible for the points, with one Eco-point worth roughly ¥1.

Points given vary between 6,000 and 9,000 for air conditioners, depending on cooling power, 3,000 and 10,000 for refrigerators depending on capacity and 7,000 and 36,000 for televisions for terrestrial broadcasting depending on the size of screen.

Starting Wednesday, purchasers of these appliances may register Eco-points by mailing applications along with documents such as receipts and copies of product warranties to the Eco-point secretariat. These points may be exchanged for merchandise coupons, electronic money and other items of choice.

For instance, 13,500 Eco-points may be exchanged for ¥12,000 stored in a Suica electronic money card issued by East Japan Railway Co., while 5,000 points are exchangeable for ¥5,000 worth of department store coupons.

So, how can I help the environment by purchasing newer appliances? This is how the points are awarded for refrigerators and TVs:

• Refrigerators
  • 501L or more: 10,000
  • 401L to 500L: 9,000
  • 251Lto 400L: 6,000
  • 250 or less: 3,000
• Digital terrestrial TVs (LCD and plasma)
  • 46-inch or larger: 36,000
  • 40 to 42 inch: 23,000
  • 37-inch: 17,000
  • 26 to 32-inch: 12,000
  • 26-inch or smaller: 7,000

The list of refrigerators eligible for the eco-points program is here [PDF]. TVs are here [PDF].

Note: The links to the lists of eligible appliances seem to have died. They were working a few days ago, but somebody seems to have removed them from this page on the eco-point website.

I currently own a 28-inch Sony TV that is rated at 125W and a 401L Hitachi refrigerator rated at 140W, or 260kWhr/year. Both are 6 years old and in good working order. I want to maximize my points, so that means buying a larger TV and fridge.

Let's go for a Sony 52-inch KDL-52X5050. According to Sony, it consumes 315W, more than double the consumption of my current TV. How about a 46-inch Sharp LC-46AE6? 150 watts. A 40-inch Sharp LC-40AE6? 120W, so I'm better off in terms of consumption, plus I end up with a larger screen although I'm going to have to pay over 100,000 yen for it.

The same goes for refrigerators. The one I have has consumes 260kWhr/year. Let's look at the Hitachi R-SF50YM, which has a capacity of 501L. It consumes approximately 400 kWh/year. How about Panasonic's 470L NR-F473TM? It consumes roughly 390kWh/year. A quick look at the offerings from Panasonic and Hitachi shows that I need to buy a significantly smaller refrigerator if I'm to reduce my energy consumption.

Can you reduce your energy consumption by upgrading to newer appliances? Yes, but only if you pay attention. But when was the last time you thought about power consumption when shopping for an appliance? Sadly, the way the eco-point scheme is structured, consumers are "rewarded" for purchasing larger and more expensive appliances, which also consume more electricity. If you fall into the trap of maximizing your eco-points, you will likely increase your overall electricity consumption instead of reduce it. As I said before, like the 12,000 yen kickback, it's a ploy to boost consumption in the short term under the guise of "being green."

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.

「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. . 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.