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Importance of Global Compliance System
In recent years, there are many cases where misconducts in an organization are revealed by whistleblowers.
Depending on the degree of misconducts, businesses may face legal risks such as administrative measures imposed by regulatory authorities and lawsuit filed by shareholders or consumers, and most importantly “reputation risk” which undermines the credibility of the company may occur and the business may suffer immeasurable damage.
As businesses become more globalized in recent years, global compliance is essential.
In particular, as it becomes more and more common that compliance-related laws are applied extraterritorially (such as the Unfair Competition Prevention Law in Japan, Foreign Corrupt Practices Act (FCPA) in the U.S., and the Bribery Act in the U.K.), the impact of noncompliance in a particular country is no longer limited to the business in the region but extended to the business around world.
Under these circumstances, Japanese companies are required to comply with not only the laws and regulations, government guidelines and rulings, voluntary guidelines of private sectors and corporate ethics in Japan but also compliance policies of overseas subsidiaries. Therefore, it is necessary for overseas subsidiaries to establish a system to ensure the compliance with the laws and regulations in their respective jurisdictions.
However, it is not easy for companies to establish their own compliance systems (such as having a compliance officer and opening a whistleblowing hotline) in all jurisdictions of their subsidiaries.
Also, in case of overseas subsidiaries, it is very difficult to respond to a company-wide noncompliance incident where, for example, the management of an overseas subsidiary are involved in a cover-up of the incident.
One Asia Lawyers
Global Whistle-Blowing System (GWS)
One Asia Lawyers Group with its global network of offices and member firms provides legal support to help our clients to prepare compliance policy and establish a whistleblowing hotline not only in Japan but globally.
GWS is provided under the review and supervision of lawyers in Japan and other Asian countries. Under the system, if any misconduct occurs in Japan or other counties, our lawyers in the corresponding country will respond promptly to support the client.
1 Support for establishing a compliance system
When establishing a compliance system, it is important to build a cycle where (1) compliance policy is developed, (2) the compliance policy is thoroughly communicated and properly operated, and (3) audits are conducted to check the proper operation of the policy and suggest any improvements, and as a result of the audits, the policy and the operation are reviewed and revised.
Review and revision based on audits
1Preparation of Policy
- Whistleblowing policy
- Anti-bribery laws and regulations
- Competition laws and regulations
- Personal information protection laws
- Labor laws (sexual harassment and power harassment)
- Consumer protection laws
- Guidelines
- Industry code of ethics
2Operation and Implementation
- Notification of the introduction of whistleblowing system
- Briefing sessions on the policy
- Seminars and webinars in each country
3Audits
- Development of audit manuals
- Surveys regarding each rule
- Investigation and interview by audit team
- Investigation without notice
GWS supports the development of policies in multi languages that take into account anti-bribery laws, competition and anti-monopoly laws, personal information protection laws, labor laws (including sexual harassment and power harassment), and consumer protection laws as well as guidelines by regulatory authorities and industry ethics regulations in each county.
At this stage, our lawyers in Japan and other countries can supervise and assist the preparation of policies that comply with the laws and regulations around the world.
We can also provide services tailored to the client’s specific requests, such as drafting an anti-bribery policy in certain jurisdictions where the client has subsidiaries.
At the next stage (operation and implementation), we provide seminars and answer queries to ensure that employees are thoroughly informed of the policies.
We can provide seminars not only in Japan but also in other countries where subsidiaries are located. These seminars can be held in Japanese, English and other local languages.
At the audit stage, we provide support to develop audit manuals and conduct surveys and unannounced audits.
We can provide multilingual auditing support in Japan and around the world.
2 Support for establishing a global whistleblowing hotline
In addition to establishing a compliance system mentioned above, businesses need to establish a system to detect any violations of the policies and regulations.
Most internal misconducts are reported by whistleblowers and if it is covered up, it becomes hard to detect. Therefore, establishing a whistleblowing hotline is the most effective way to detect misconducts.
A whistleblowing hotline helps not only to detect any misconducts but also to reduce the risk of internal misconducts suddenly being reported to external parties (police, media and shareholders etc.) and to show business’s approach to compliance and enhance corporate image and reputation.
3 Importance of the external whistleblowing system
If a whistleblowing hotline and investigation team is under the direct control of company’s management, employees may hesitate to make a report.
Also, such whistleblowing system would not work sufficiently to detect misconducts by the management. In order to protect whistleblowers and create an environment where they feel comfortable making a report, it is necessary to establish multiple contact points both inside and outside the company while ensuring strict information management based on confidentiality obligations.
In particular, when it comes to misconducts in overseas subsidiaries, there are quite a few cases where the management of a subsidiary is involved in misconducts and where a Japanese executive assigned from Japan to an overseas subsidiary are engaged in a company-wide misconduct.
In addition, not all overseas subsidiaries have personnel with experiences in the legal and compliance fields and there is often a lack of awareness of compliance in the first place. On the other hand, it is not easy for legal and compliance departments in a head office in Japan to conduct audit on all overseas subsidiaries.
4 Benefits of Global Whistle-Blowing System (GWS)
One Asia Lawyers (GWS) with its global network of offices and member firms can help the business in their compliance effort as an external whistleblowing hotline in multiple languages in Japan and other Asian countries.
Communication can be done through phone, fax, email and other methods, and we can conduct an interview in Japan and other Asian countries right after we receive a report.
We provide support in not only Japanese and English but also other local languages to help establish a highly effective global whistleblowing system.
