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Scrutiny from regulators outside Japan: Challenges for Japanese companies Once historic wrongdoing such as fraud is acknowledged and accepted, Japanese companies often over-correct. This may include publishing: (i) detailed findings of internal investigations; (ii) detailed findings of investigations by Third-Party Committees established by the company; or (iii) press releases and other documents containing excessive granularity about past misconduct and the remedial measures taken by the company. While this may be culturally expected within Japan, it can have unforeseen legal consequences outside Japan. Why do Japanese companies feel compelled to publish information about historic wrongdoing that exposes the company to significant additional liability that could have been avoided, or at least minimised?  What risks does this create – particularly in cross-border contexts? Speakers: ⁠⁠John Lane⁠⁠, ⁠⁠Nina Newcombe⁠⁠, ⁠⁠Anup Bharadwaj⁠ You can find the slides for this episode at: ⁠https://www.nagashima.com/en/seminars/seminar20261027-1/ Featured topics page: ⁠⁠https://www.nagashima.com/eng/lp/overseas_regulatory_scrutiny/

Scrutiny from regulators outside Japan: Challenges for Japanese companies The approach that regulators outside Japan take to corporate misconduct can vary significantly to their counterparts in Japan.  Japanese companies accustomed to many face-to-face meetings with regulators in Japan may incorrectly assume that the same approach can be adopted when dealing with regulators outside Japan. This can create a harmful disconnect between the Japanese company and the overseas regulator.  What are the risks for Japanese companies that attempt to manage interactions with overseas regulators in the same way as they interact with regulators in Japan? Speakers: ⁠⁠John Lane⁠⁠, ⁠⁠Peter Bungate⁠⁠, ⁠⁠Nina Newcombe You can find the slides for this episode at: https://www.nagashima.com/en/seminars/seminar20261013-1/ Featured topics page: ⁠⁠⁠https://www.nagashima.com/eng/lp/overseas_regulatory_scrutiny/

Scrutiny from regulators outside Japan: Challenges for Japanese companies Japanese companies often establish a Third-Party Committee (TPC) to investigate allegations of misconduct in Japan. The TPC comprises at least three members who are independent from the company. The TPC's investigation report is made public at the end of the process. The TPC investigation creates regulatory and litigation exposure outside Japan because the company's communications with the TPC and the TPC's investigation itself are not protected by legal professional privilege.  Why are companies content to submit to an investigative process which dramatically increases their regulatory and litigation risk outside Japan? Speakers: ⁠⁠John Lane⁠⁠, ⁠⁠Daisuke Fukamizu, ⁠⁠Anup Bharadwaj You can find the slides for this episode at: https://www.nagashima.com/en/seminars/seminar20260929-1/ Featured topics page: ⁠⁠⁠https://www.nagashima.com/eng/lp/overseas_regulatory_scrutiny/

Scrutiny from regulators outside Japan: Challenges for Japanese companies The Japanese legal system does not have a system of legal professional privilege that operates in the same way as in common law jurisdictions.  Many Japanese companies and their counsel are unaware of how to maintain privilege protections in the context of overseas litigation and regulatory investigations.  As a result, Japanese companies will sometimes make decisions or take actions that inadvertently waive privilege, thereby increasing the company's risk exposure.  How can Japanese companies ensure that they maintain the protections offered by legal privilege to reduce their regulatory and litigation risks overseas? Speakers: ⁠⁠John Lane⁠⁠, Junichi Ikeda⁠⁠⁠, ⁠⁠⁠Peter Bungate You can find the slides for this episode at: ⁠https://www.nagashima.com/en/seminars/seminar20260915-1/ Featured topics page: ⁠⁠⁠https://www.nagashima.com/eng/lp/overseas_regulatory_scrutiny/

Scrutiny from regulators outside Japan: Challenges for Japanese companies Japanese companies prefer to act in accordance with established practice and previous decisions. This can make it difficult to revisit a decision once made, even if new, relevant information becomes available.  Conservatism and inflexibility in decision-making can create issues when a company is exposed to regulatory scrutiny or litigation outside Japan. What risks arise for Japanese companies operating outside Japan if the highest priority when making important decisions is that a certain process has been followed rather than a careful analysis of all critical information? Speakers: ⁠⁠John Lane⁠⁠, ⁠⁠Yuta Sugie, ⁠⁠Nina Newcombe⁠⁠ You can find the slides for this episode at: https://www.nagashima.com/en/seminars/seminar20260901-1/ Featured topics page: ⁠⁠⁠https://www.nagashima.com/eng/lp/overseas_regulatory_scrutiny/

Scrutiny from regulators outside Japan: Challenges for Japanese companies While lying in investigative interviews is common across cultures, its frequency and persistence in Japanese companies can complicate, unnecessarily delay or even obstruct regulatory investigations.  This kind of conduct also heightens the risk that efforts to build rapport and trust with the regulator will be undermined leading to more severe sanctions on the company.  Why does dissembling seem pervasive during investigative interviews of employees at Japanese companies?  Speakers: ⁠⁠John Lane⁠⁠, ⁠⁠Ayumi Fukuhara, ⁠⁠Nina Newcombe You can find the slides for this episode at: https://www.nagashima.com/en/seminars/seminar20260721-1/ Featured topics page: ⁠⁠⁠https://www.nagashima.com/eng/lp/overseas_regulatory_scrutiny/

Scrutiny from regulators outside Japan: Challenges for Japanese companies Japanese companies can find it difficult to make and implement decisions that represent significant departures from past practices — even when those practices are unlawful or no longer viable. Why do Japanese companies hesitate to make decisions that break from precedent, even when maintaining the status quo would harm the company? Speakers: ⁠⁠John Lane⁠⁠, ⁠⁠ ⁠⁠Hironobu Tsukamoto⁠⁠, ⁠⁠Anup Bharadwaj You can find the slides for this episode at: https://www.nagashima.com/en/seminars/seminar20260707-1/ Featured topics page: ⁠⁠⁠https://www.nagashima.com/eng/lp/overseas_regulatory_scrutiny/

Scrutiny from regulators outside Japan: Challenges for Japanese companies Some Japanese companies will downplay the seriousness of misconduct and can even resile from implementing appropriate remedial measures once they become aware that a competitor is engaging in similar misconduct. Does this 'two wrongs makes a right' approach increase a company's regulatory risk in relation to non-Japanese regulators? Speakers: ⁠⁠John Lane⁠⁠, ⁠⁠Peter Bungate⁠⁠, Anup Bharadwaj⁠ You can find the slides for this episode at: https://www.nagashima.com/en/seminars/seminar20260623-1/ Featured topics page: ⁠⁠⁠https://www.nagashima.com/eng/lp/overseas_regulatory_scrutiny/

Scrutiny from regulators outside Japan: Challenges for Japanese companies Let’s assume that fraud does not occur more frequently at Japanese companies than at companies in other highly-developed economies. Even if this assumption is correct, several underlying factors in Japanese corporate culture and structures create an environment where identifying and then stopping fraud or misconduct is difficult. The result is that misconduct can continue for long periods.  When corporate fraud is uncovered in Japan, the problem is often more serious than it otherwise would have been if it had been detected and stopped earlier.  The length of the fraud is one of the key factors that non-Japanese regulators look at when evaluating the egregiousness of the misconduct and the amount of any penalties. Are there certain aspects of Japanese corporate culture which make fraud difficult to stop once it occurs? Speakers: ⁠⁠John Lane⁠⁠, ⁠⁠⁠Kensuke Suzuki⁠⁠⁠, Peter Bungate You can find the slides for this episode at: ⁠⁠https://www.nagashima.com/seminars/seminar20260609-1/ Featured topics page: ⁠⁠⁠https://www.nagashima.com/eng/lp/overseas_regulatory_scrutiny/

Scrutiny from regulators outside Japan: Challenges for Japanese companies Public behaviour in Japan is often characterized as courteous, rule-abiding, and considerate — and this is largely true. This behaviour is driven by a feeling of ‘external observation’. Expressed differently: Japan is very densely populated and others are always around ready to judge; since inconveniencing others brings social opprobrium, public life plays out in very scripted ways. It is stressful to always be observed. So, in private settings, or when scrutiny is absent, many individuals understandably let their guard down. Sometimes this can lead to a disregard for legal or safety norms. But it is a mistake to rationalise or ignore misconduct on the assumption that it will remain internal or hidden. How does the contrast between behaviour in public and private settings in Japan affect compliance, decision-making, and risk exposure at companies?  Sources: Mitsubishi Electric: CEO exit will not end Japan Inc’scover-up culture. (2 July 2021). Financial Times. ⁠https://www.ft.com/content/708a855f-6f02-4382-9f7d-24f26789c890⁠ Speakers: ⁠⁠⁠John Lane⁠⁠⁠, ⁠⁠⁠Peter Bungate⁠⁠⁠, ⁠⁠⁠Nina Newcombe⁠⁠⁠, ⁠⁠⁠Anup Bharadwaj⁠⁠ You can find the slides for this episode at: https://www.nagashima.com/en/seminars/seminar20260526-1/ Featured topics page: ⁠⁠⁠⁠https://www.nagashima.com/eng/lp/overseas_regulatory_scrutiny/

Scrutiny from regulators outside Japan: Challenges for Japanese companies In Japanese corporate culture, shoganai — the belief that ‘it can’t be helped’— can reinforce a fatalistic acceptance of problems within the organization. It can discourage employees from questioning authority, reporting misconduct, or pushing for change. When unethical practices, inefficiencies, or questionable decisions are met with resignation rather than resistance, harmful issues are allowed to persist unchecked.   What steps can Japanese companies take to foster accountability and openness in the face of a shoganai mindset — especially when operating internationally where shoganai culture is not understood or accepted, and can be viewed as complacency or even a lack of integrity? Speakers: ⁠⁠John Lane⁠⁠,⁠ Sho Awaya⁠, ⁠Peter Bungate⁠⁠ You can find the slides for this episode at: https://www.nagashima.com/en/seminars/seminar20260512-1/⁠⁠. Featured topics page: ⁠⁠⁠https://www.nagashima.com/eng/lp/overseas_regulatory_scrutiny/

Scrutiny from regulators outside Japan: Challenges for Japanese companies It is not uncommon for Japanese companies to retain employees who have engaged in wrongdoing without subjecting those employees to disciplinary action proportionate to the misconduct in question.  This can send a strong message to overseas regulators that the company condones the misconduct despite statements to the contrary. The company risks damaging its credibility with the regulator which can lead to the imposition of significantly harsher penalties.  Why would any company want to retain employees who have committed crimes or whose conduct has caused the company to breach its legal and regulatory obligations? Speakers: ⁠⁠John Lane⁠⁠, ⁠⁠Akiko Inoue⁠⁠, ⁠⁠Nina Newcombe You can find the slides for this episode at: ⁠https://www.nagashima.com/en/seminars/seminar20260421-1/⁠. Featured topics page: ⁠⁠⁠https://www.nagashima.com/eng/lp/overseas_regulatory_scrutiny/

Scrutiny from regulators outside Japan: Challenges for Japanese companies Compartmentalisation and siloed thinking are common in many companies. When employees rigidly adhere to reporting lines and organisational structures, it can lead to dysfunctional reporting of compliance issues or misconduct. Decisions are then made withlimited, or even incorrect, information.  What risks do compartmentalisation and siloed thinking create for Japanese companies responding to investigations by regulators outside Japan?  Sources: Yoshimura, T., & Anderson, E. (2000). Inside the Kaisha: Demystifying Japanese Business Culture. Business Week Books  Speakers: ⁠⁠John Lane⁠⁠, ⁠⁠Peter Bungate⁠⁠, ⁠⁠Nina Newcombe You can find the slides for this episode at: https://www.nagashima.com/en/seminars/seminar20260407-1/. Featured topics page: ⁠⁠https://www.nagashima.com/eng/lp/overseas_regulatory_scrutiny/

Scrutiny from regulators outside Japan: Challenges for Japanese companies Many Japanese companies transfer their employees to new roles every two to three years.  These transfers can be to other departments or subsidiaries, either in Japan or overseas.  These rotations are not typically tied to expertise and, as a result, can perpetuate issues such as dysfunctional reporting and loss of organisational memory.  What risks do rotational staffing policies create and how can these transfers impact Japanese companies facing regulatory investigations abroad? Speakers: ⁠⁠John Lane⁠⁠, ⁠⁠⁠⁠Nina Newcombe⁠⁠, ⁠⁠Anup Bharadwaj⁠ You can find the slides for this episode at: https://www.nagashima.com/en/seminars/seminar20260324-1/ Featured topics page: ⁠⁠https://www.nagashima.com/eng/lp/overseas_regulatory_scrutiny/

Scrutiny from regulators outside Japan: Challenges for Japanese companies Promotions of employees at Japanese companies are primarily based on the relevant employee’s length of service at the company. Performance-based factors are not irrelevant, but they are of secondary importance. As a result, companies sometimes have employees in senior positions who lack all the skills that the position demands. Why do Japanese companies promote employees mainly based on length of service and what risks does this create when a Japanese company is involved in a legal dispute or investigation outside Japan? Speakers: ⁠⁠John Lane⁠⁠, ⁠⁠Akiko Inoue⁠⁠, ⁠⁠Anup Bharadwaj You can find the slides for this episode at: https://www.nagashima.com/en/seminars/seminar20260310-1/. Featured topics page: ⁠⁠https://www.nagashima.com/eng/lp/overseas_regulatory_scrutiny/