| TOKYO, April 1
TOKYO, April 1 A group of Japanese lawyers is
setting up a rating service to evaluate investigations on
corporate scandals amid criticism that third-party panels hired
for things like bribery cases often lack objectivity and help to
While the ratings will not carry any legal weight, the group
hopes they will encourage more thorough and independent
Establishing third-party investigative panels has become a
widely used method by Japanese companies looking to address and
mitigate scandals. But such panels lack legal authority and are
vulnerable to manipulation. They also have sometimes been
criticised for rubber-stamping story lines favoured by
The move comes as Prime Minister Shinzo Abe is trying to woo
more foreign investors to Japan. A major criticism among
investors has been an insular corporate culture that has failed
to hold executives and companies accountable for malfeasance.
One of the most controversial cases was in 2011 when Kyushu
Electric Power Co watered down a third-party panel
report on its alleged attempts to manipulate public opinion on
the restarting of nuclear reactors.
"Quite a few third-party committees are just not functioning
properly and allow companies that choose panel members to do
whatever they want," attorney Hideaki Kubori, one of the group's
members, told Reuters. "This is an awful situation and we cannot
just ignore it and let it go."
Kubori said the group, which plans its first meeting on
Wednesday, will rate whether panels hired to investigate
corporate scandals are independent, neutral and thorough.
He said they plan to rate a report on a scandal at lender
Mizuho Financial Group Inc last year over an
affiliate's loans to organised crime networks, a case that
showed ties remained between Japanese banks and "yakuza" gangs.
Nicholas Benes, representative director of The Board
Director Training Institute of Japan, said that while he
supported "the spirit" of the move to rate investigations, he
believed it would leave a core governance problem unaddressed.
In the United States and other countries such investigations
would be handled by committees picked by independent directors
who could be held liable for their veracity. In Japan boards are
packed with insiders and there is no clear line of
accountability for such investigations.
The priority should be on creating a legal framework to
boost the independence and accountability of Japanese boards,
"It's a Band-aid that is better than not having a Band-aid,
but it is being directed at a wound which is of much larger
proportions and needs antibiotics and legal structures as well,"
he said of the rating service.
"And the more we go we down this crazy road of creating
extra-legal solutions where people don't have fiduciary duties
they should have, we are always going to be creating something
that is not optimal."
(Additional reporting by Emi Emoto; Editing by Matt Driskill)