The Japan Business Federation (Nippon Keidanren) beefed up its corporate activities charter Tuesday to help prevent corporate scandals among member firms, including a provision enabling the expulsion of scandal-hit companies from the group.
Under the revised 10-point charter, the nation’s largest business group urges member firms to set up a telephone help line for whistle blowers and requests that employers increase their accountability over corporate activities.
“It was regrettable that (recent corporate scandals) spurred public distrust in corporate activities,” Nippon Keidanren Chairman Hiroshi Okuda said. ” Employers have to take the initiative to create corporate cultures in which negative information (regarding their activities) will be heeded.”
In dealing with scandal-hit companies, the group can now suspend their memberships, order they withdraw from the group or expel them. Previously, it was only able to issue warnings to delinquent members, accept their voluntary withdrawal from positions within the group or agree to the voluntary suspension of group activities.
If the situation at a punished company is improved, the sanctions would be lifted, Okuda said.
New member companies will be asked to pledge their compliance with the charter and promise not to cause any scandals. Current members will not be required to make such promises, Okuda said.
Nippon Keidanren had planned to revise its charter at the end of this year, but a spate of corporate scandals involving its members, including Tokyo Electric Power Co., Nippon Meat Packers Co. and trading house Mitsui & Co., forced Nippon Keidanren to act sooner.
Executives of Tepco and Nippon Meat Packers resigned from their positions at Keidanren. Mitsui will not be involved in the group’s activities for three months.
In 1991, the business group, then the Japan Federation of Economic Organizations (Keidanren), created the charter in line with corporate efforts to disassociate members from inappropriate relations with shady groups, including “sokaiya” corporate racketeers.
The charter is now being revised to restore the ethical standards of its own members, according to Keidanren officials.