Leader of MCA Buyout Talks Is Demoted : Entertainment: A Japanese executive is one of several at parent firm Matsushita Electric Industrial Co. embroiled in a scandal involving a subsidiary.

By ALAN CITRON and LESLIE HELM

March 25, 1992 12 AM PT

TIMES STAFF WRITERS

A Japanese executive who played a key role in Matsushita Electric Industrial Co.’s $6.59-billion acquisition last year of entertainment giant MCA Inc. and others involved in the delicate melding of the companies’ cultures have been ensnarled in a scandal unfolding in Osaka, Japan.

Matsushita Executive Vice President Masahiko Hirata, who led the MCA buyout talks, was demoted Tuesday in connection with a controversy involving a Matsushita subsidiary called National Lease Co.

Japanese newspapers reported that National made $385 million in loans--$230 million of which are not recoverable--to Osaka restaurateur Nui Onoue, a bar hostess-turned-billionaire charged with using fake certificates of deposit to borrow billions of yen.

Shoji Sakuma, a Matsushita sales specialist who had also consulted with MCA executives in Universal City, resigned because of the scandal. And company Chairman Masaharu Matsushita and President Akio Tanii agreed to forgo 50% of their salaries for three months.

MCA spokeswoman Christine Hanson had no comment on the developments. But some senior MCA executives--who are still in the early stages of forging working relationships with Matsushita--were said to be shaken.

One, who asked not to be named, said Hirata’s demotion to a vague post as a Matsushita board member and the prospect that he will be removed from an MCA executive committee formed after the sale could be a big setback.

“This is a man we had a relationship with,” the executive said. “We spent a lot of time educating him. If he’s off the committee, we’ll have to educate someone else.”

The shake-up was apparently the result of an internal investigation at Matsushita, since the allegations about Onoue date back to last year.

Although the company does not believe National Lease did anything illegal or improper, Matsushita felt it had to “take responsibility for the bad debts, for the bad results, for causing trouble to shareholders,” said Akira Nagano, a Matsushita spokesman.

The colossal job of integrating the two operations now falls to Mamoru Furuichi, a corporate advertising executive who was formally named head of Matsushita’s new entertainment arts division earlier this month--perhaps in anticipation of the shake-up.

Furuichi, who visited Universal City in February, was described by one MCA executive as “more of a creative guy than a hardware guy.”

Matsushita’s purchase of MCA was consummated in January, 1991, and efforts at bridging the culture gap between the firms--which involves everything from language to business style--have made slow but steady progress.

Matsushita, based in Osaka, is a manufacturing giant with annual sales approaching $50 billion. MCA is an entertainment conglomerate whose units include Universal Pictures and Universal Studios theme parks.

One MCA executive said the reorganization that culminated in the management shake-up could ease tensions between the companies.

“The chain of command (between Matsushita and MCA) was never clearly defined before,” the executive said. “Everyone was involved to a degree, and that was one of the problems. You never really knew who you were supposed to be talking to.”

Japan America Society Executive Director Steve Clemmons, who has lectured MCA employees on Japanese culture and business, said Matsushita’s actions in the scandal appear to be unusually harsh.

“It’s recognition by Matsushita that this little subsidiary did something really out of line,” Clemmons said. “It shows the true seriousness of it.”

Onoue was arrested on fraud charges last summer, badly tarnishing the reputation of one of Japan’s most solid banks, the Industrial Bank of Japan. The bank was estimated last fall to have directly or indirectly loaned her as much as $2 billion.

She is accused of using about $2.5 billion worth of bogus certificates of deposits to borrow money and play the stock market--taking advantage of what she claimed were stock tips from God.

Onoue was considered a safe bet by banks. At one point she owned shares worth roughly $800 million in 20 different companies and was the largest individual shareholder in the Industrial Bank of Japan.

When stocks plunged in 1990, she lost much of her fortune and persuaded a bank officer at Toyo Shinkin, a finance company, to forge certificates of deposit which she then allegedly used as collateral to borrow money.

Citron reported from Los Angeles and Helm reported from Tokyo.