TOKYO - Japan's trade ministry on Friday denied its officials directed an adviser to contact Toshiba Corp shareholders as part of a plan to pressure them to support management in a key vote on board membership.

An explosive shareholder-commissioned investigation released on Thursday found Toshiba management and the government colluded to lean on foreign investors to fall in line with management's wishes.

According to the findings in the investigators' report, the trade ministry "effectively asked" a government adviser, described as "Mr. M", to negotiate with Harvard University's endowment fund to change its voting behavior.

Ministry officials have informed me that it's not true that any request was made to engage with individual investors.

Hiroshi Kajiyama, Japan's trade minister

"Ministry officials have informed me that it's not true that any request was made to engage with individual investors," Trade Minister Hiroshi Kajiyama said at a regular press briefing. 

He added that the ministry was waiting on Toshiba's response to the report.

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Sources have previously told Reuters that Hiromichi Mizuno, a ministry adviser at the time, had told the Harvard fund it could be subject to a regulatory probe if the fund did not follow management's recommendations at last year's annual general meeting.

Mizuno, a Tesla Inc board member and friend of Elon Musk, previously oversaw Japan's US$1.4 trillion Government Pension Investment Fund and is currently the United Nations Special Envoy on Innovative Finance and Sustainable Investment.

He did not immediately respond to a request for comment.

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The independent investigation found that Toshiba had devised a plan to effectively prevent shareholders from exercising their rights by putting undue influence on Effissimo Capital Management, Toshiba's top shareholder, to withdraw its proposed board nominees.

According to the report, the plan sought to pressure another fund, 3D Investment Partners, in addition to the Harvard fund to change their votes and that Prime Minister Yoshihide Suga verbally encouraged pressure on shareholders when he was chief cabinet secretary during a meeting with a senior Toshiba executive last year.

Suga, who left Japan yesterday for a meeting of G7 leaders in Britain, has denied that allegation.

The report flies in the face of efforts led by Japan's finance ministry to improve corporate governance and attract foreign investment, and comes as the country tries to burnish its international reputation ahead of the 2020 Olympic games in Tokyo next month.

As one of the industrial conglomerates that modernized Japan and helped its post World War II economic recovery, Toshiba enjoys close ties with government. Its nuclear reactors and defence equipment businesses mean it is also closely monitored by industry bureaucrats.

In 2017, however, battered by accounting scandals and massive writedowns on its US nuclear reactor business, Toshiba had to quickly seek a large capital injection from overseas investors.

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As a result, activist investors are estimated to account for 25 percent of Toshiba's shareholder base.

Toshiba's shares were down 1.3 percent in early afternoon trade while the Nikkei 225 index was flat.