SUMITOMO’s Unfair and Unjust Practices

SUMITOMO’s Social Responsibility

Global business communities recognize SUMITOMO as one of the prominent business groups conducting business worldwide in every sector of the economy.

For a huge multinational conglomerate such as SUMITOMO, maintaining and enhancing the image of their brand name has always been a priority. The reason for this is clear: if any group in its company engages in illegal and/or unethical conduct, it will attract swift public attention. The positive image of SUMITOMO will be damaged. This will have a negative impact on all other SUMITOMO related companies.

To ensure that employees follow proper standards of conduct, the “Sumitomo Group Public Affairs Committee” works together with and advises all SUMITOMO related companies. It stands to reason that these standards should include compliance with company internal rules, government laws and regulations, as well as professional ethics.
“Trust” and “Fairness” are critical elements which constitute the above compliance standards.

Urban redevelopment is a very lucrative business to a developer such as Sumitomo. However, there exists a hurdle prior to the commencement of the project. According to the relevant laws and regulations in Japan, SUMITOMO is unable to proceed with redevelopment project unless they obtain two-thirds consent from the local property owners.

With this requirement, a developer must first obtain consent from the property owners in order to begin the project.
An ethical real estate developer which honors compliance standards would start a diplomatic dialogue, disclose all the necessary information (both advantages and disadvantages) so that the property owners can assess the project thoroughly and make their own decision as to whether or not to consent to the project.
However, SUMITOMO does not follow this process.

SUMITOMO Realty & Development provides the “good stories”, but not all the necessary information required for the owners to make a sound decision. Moreover, SUMITOMO actively conducts various unfair and unjust practices against innocent property owners in order to lead them into signing the letter of consent. Owners are usually laymen with little expertise in urban redevelopment business.
Trying to take advantage of these owners to coax them into accepting the project is unfair. Such an improper conduct by SUMITOMO needs to stop.

• SUMITOMO fails to honor their compliance programs.
• SUMITOMO fails to value “Fairness” and “Justice”.
• SUMITOMO fails to disclose necessary information.
• SUMITOMO fails to tell the “Truth” to the property owners.

Many property owners believe that their constitutional rights (i.e. “property rights” and “human rights”) are being infringed upon by SUMITOMO.

Examples of SUMITOMO’s Unfair and Unjust Practices:

1. Setting up owners’ association in an undemocratic way.
   As the project must be initiated by property owners (not directly by
   Sumitomo), Sumitomo invited only 7 property owners to have
   them set up an owners’ association called “Junbi Kumiai.”
   This association unilaterally initiated the redevelopment project which affects 260 property owners.
   (property owners rightfully believe that only 7 owners initiating the project covering 260 is an unjust and undemocratic practice.)
2. Setting up a so-called “condo unit owners only get one vote per complex” rule.
   Whereas a single-house owner gets “one vote”, condo unit owners only get “one vote” per entire condo complex.
   Of the total 260 property owners in Sengakuji, 230 are condo unit owners, and the largest condo that exists in the area houses a total of 119 owners.
   If this SUMITOMO rule is to be applied, a disparity in terms of “right to vote” can be as high as 119 times.
   This may be an infringement on their Constitutional rights!
   The number of property owners, after applying SUMITOMO’s rule, will be reduced from 260 to 32. This is very convenient for SUMITOMO.

   Why is SUMITOMO doing this?
   The assumption is that the smaller the number of property owners, the easier for SUMITOMO to attain two-thirds consent because it requires less effort to coax property owners.
   However, this unfair practice by SUMITOMO may lead to an infringement of basic human rights and property rights as guaranteed by the Japanese Constitution.

3. SUMITOMO provides only positive stories to the property owners.
   “You can move into a brand-new condo unit for free if you consent to the project” is a typical sales pitch that they use against unsuspecting property owners. At the same time, SUMITOMO avoids providing any negative information, and a detailed business plan as well as business risks that the property owners would be assuming. (These are typical unfair practices aimed at unknowing property owners, who are uninformed about the contract and the project.)
4. The “project consent form”, which SUMITOMO handed out to the property owners to sign off was nothing but a “blank power of attorney”.
   The consent form has only one sentence, which states
   “I agree to let the association proceed with redevelopment project procedures.” This is improper. Without a separate contract between SUMITOMO and a property owner which clearly stipulates “consideration” (i.e., something of value given by SUMITOMO in return for the promises of the other party to the contract), it would be unfair for SUMITOMO to collect a letter of consent from a property owner.
   (This is another unfair practice aimed at innocent and naive property owners who have little knowledge about contracts. A resident from Sengakuji described this situation as “Turkeys voting for Thanksgiving”.)
5. As to the consent form, SUMITOMO instructs the owners to leave the “dates” blank.
   The exact reason for this is unclear. However, considering the fact that a “signed date” constitutes an important part of the agreement, some kind of an illegal or malicious intent by SUMITOMO is inferred.
6. The “property appraisal form”, which SUMITOMO handed out to each and every property owner (as part of the effort for property owners to consent to the project), did not have the SUMITOMO name, nor an authorized signature.
   While SUMITOMO wanted a signed “consent form” from property owners, they probably didn’t want to guarantee the property value to the owners as a consideration.
   This is quite an unfair and unjust transaction by SUMITOMO.
   A prominent company like SUMITOMO shouldn’t hand out “misleading documents” to property owners.
7. About half of the new condo units where property owners will be relocated will be dark and cold units without sunlight throughout the year.

   “You can move into a brand-new condo unit for free if you consent to the project” has always been SUMITOMO’s sales pitch. It sounds enticing, but the reality is a dark and cold room without sunlight.
   Property owners had not been aware of this fact until one owner, suspicious about SUMITOMO’s intentions, had an architect analyze SUMITOMO’s plan using a 3D-CAD computer system.
   SUMITOMO should have disclosed this important fact to the property owners prior to the computer analysis. “Trust” is what counts in Japanese society. Even more disturbing, the computer analysis
   revealed that the drawing arranged by SUMITOMO had “sun shadow lines” drawn much shorter than in reality.

   Was this done intentionally?

   Such inaccurate drawings can easily mislead the property owners, and it is hard to believe a prominent company like SUMITOMO would make such a mistake by chance.
   (Another unfair and unjust practice aimed at innocent property owners)

Above are just a few examples of SUMITOMO’s unfair and unjust practices, and there are many more…

It seems clear that SUMITOMO is trying to take advantage of property owners and have them sign a consent form in an unfair and unjust manner.

Urban redevelopment proposal always have “pros and cons”, or “advantages and disadvantages”. For a prominent and prestigious company like SUMITOMO, it is their responsibility to fully explain details of their projects to the property owners in a fair and a courteous manner. They should disclose facts that might adversely affect their project.