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Corporate whistleblowing system, plea bargaining behind fall of Nissan's Ghosn, others

This file photo dated Dec. 22, 2017 shows Nissan Motor Co.’s global headquarters in Yokohama’s Nishi Ward, south of Tokyo. (Mainichi/Hiroshi Maruyama)

TOKYO -- The arrest of former Nissan Motor Co. Chairman Carlos Ghosn on suspicion of understating his remuneration on financial statements began with a whistleblower inside the company and gained traction with Japan's newly minted plea bargain system, but many are still critical of the automaker for allowing Ghosn free reign for so long.

"Internal reports not only keep organizations honest, but are essential to improve society as a whole and are of extremely high value to the public," emphasized lawyer Masato Nakamura, who is well-versed in the system.

It was a Nissan whistleblower's report that led to an internal investigation of the company. This in turn led to the discovery of the former chairman allegedly covering up the amount of money he received and other suspected illegal actions by executive officers. These executives and other related parties were then leveraged by prosecutors in plea bargain deals to put a case together.

However, the incident is also being looked at as what Nissan President Hiroto Saikawa has called a "negative side effect" of Ghosn serving as the top executive of the Japanese automaker for close to 20 years.

"Even if a whistleblower comes forward, the more power an executive holds over the company, the higher the possibility that they can order their aides to bury the report or cover up any evidence of wrongdoing," Nakamura explained. Until now, the whistleblowing system was not put into effective use within Nissan.

Now, the special investigative unit of the Tokyo District Public Prosecutors Office is considering building a case against Nissan over its criminal responsibility as a corporate entity. An individual related to Nissan said, "The former chairman went too far (in using the company) for his personal gains, but the people around him and the company as a whole will not be able to dodge responsibility" for the incident.

Those who come forward with corporate wrongdoing are protected under the 2006 Whistleblower Protection Act. According to Shogo Hino, an associate professor of labor law at Shukutoku University who was in charge of the protection of whistleblowers at the Consumer Affairs Agency, the system has been put in place to prevent the individual from being fired or from being subject to other punishment. The emphasis does not lie in publicizing information about the illegal activities, he said.

"It is precisely because whistleblowing and plea bargaining was used in tandem by authorities that allegations against an executive at the very top of a company, which are usually difficult to uncover, were brought to light this time," Hino said.

Of corporate whistleblowing, Hino said, "If we do not put in place a more effective system, then there is a possibility that authorities will be unable to clean up companies that engage in fraudulent actions. The Nissan case should be seen as a prime example of why the system is important."

(Japanese original by Akira Hattori, City News Department)

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