Amid the scandals involving the nation's top companies, demands for better corporate governance have been mounting not only from the public but from business circles, according to a member of the ruling Liberal Democratic Party.

"A desire to tackle the issue of how to improve corporate autonomy has rapidly grown among businesses following the blunders," said Seiichi Ota, head of the judicial affairs division subcommittee on the Commercial Code under the LDP's policy research council. "Now is the time to carry out reforms to rebuild the nation's business society and culture based on an internationally acceptable sense of ethics and a sense of social justice," Ota said in an interview with The Japan Times.

The subcommittee last month resumed research to draft a report on review of the current legal framework to better watch corporations' behavior, Ota said. Based on a previous report compiled by the subcommittee, the law was revised about four years ago to make it obligatory for firms with capital of 500 million yen or more to have one outside auditor.

"The revision, which was intended to improve corporate governance, has proved insufficient. We are now considering increasing the number of outside auditors," Ota said. As part of its current research, the LDP team has listened to opinions from executives of corporations that have adopted an American-style management system. The corporations include Sony Corp., which has decreased its number of directors and introduced outside auditors. "We are also thinking about making it compulsory for firms to form a board of directors with its members different from the firm's executive managers," he said. "Currently, there is almost no difference between a firm's board of directors and the firm's board of top managers. Under such a setup, no checks or scrutiny of a firm's management can be made by the board of directors," Ota said.

The public's patience has been tested in recent years by a spate of wrongdoing by huge corporations, including the payoffs by Ajinomoto Co. to a "sokaiya" corporate extortionist, illegal copper trading by a Sumitomo employee and unauthorized bond transactions at the New York branch of Daiwa Bank. Public anger now seems to have hit its peak with the latest revelations of sokaiya payoffs by Dai-Ichi Kangyo Bank and Nomura Securities Co.

A handful of executives from the nation's second-largest commercial bank, in terms of deposits, and the nation's top securities firm have been arrested on suspicion of making huge, illegal payoffs to sokaiya Ryuichi Koike in violation of the Commercial Code. The scale and scope of such payoffs have fueled suspicions that this scandal may only be the tip of the iceberg of financial sector corruption.