Over the years, we have striven to earn and maintain the trust of our customers and the communities we serve by upholding our corporate philosophy. We not only comply with laws and regulations, but also take a course of action to foster a strong awareness of ethics towards prevention of all kinds of corruptions including pay-offs and bribery. The Group continues to ensure strict adherence to corporate ethics by implementing specific measures of compliance.
Corporate Ethics Program
Policies and Standards for the Establishment of Corporate Ethics
In order to stay aware of corporate ethics and create a sound corporate culture, we have expressed our strong determination to comply with laws and regulations and maintain high ethical standards, in our Articles of Incorporation.
Obayashi Corporationʼs Articles of Incorporation
- Article 3 (Compliance and Sensible Course of Action)
- In the Corporation each employee and board member shall observe laws and regulations, and maintain high ethical standards in their business activity. Particularly in regard to contracts for construction works, they should not take any action that would harm the equity and fairness of the tender, such as actions that violate the Penal Code and the Antimonopoly Act (Act on Prohibition of Private Monopolization and Maintenance of Fair Trade).
Obayashi Code of Conduct within the Obayashi Basic Principles (excerpt)
- (Ensure Strict Adherence to Corporate Ethics)
- 1 Comply with laws and regulations and take a sensible course of action
2 Promote fair and free competition
3 Maintain appropriate relationships with stakeholders
4 Avoid all contact with antisocial forces
5 Ensure appropriate information disclosure and transparency of management
Structure to Ensure Adherence to Corporate Ethics
Establishment of Corporate Ethics Committee and placing Corporate Ethics Officers and Corporate Ethics Promoters
The president serves as the chief ethics officer of the Corporate Ethics Program, executive officers at the main office and the general managers of each branch serve as corporate ethics officers, and the managers of each department serve as corporate ethics promoters. Top management are responsible for corporate ethics. They recognize their own roles in realizing the spirit embodied in the Obayashi Basic Principles and work diligently to ensure compliance with corporate ethics.
Moreover, the Corporate Ethics Committee is positioned as the core of Obayashi's corporate ethics structure in the internal control system approved and reviewed by the Board of Directors every year. The Corporate Ethics Committee is chaired by the president and its members include directors, executive officers, external experts, and the head of the labor union. It operates according to the Corporate Ethics Committee Rules. The committee raises awareness of corporate ethics, formulates measures to ensure compliance with corporate ethics, monitors for legal violations or corruption, bribery, or other improper activity, investigates to determine the facts in cases involving corporate ethics violations, and formulates measures to prevent recurrence. Each branch has established a Branch Corporate Ethics Committee and implements independent activities to promote corporate ethics.
Corporate Ethics Promotion Framework Chart
Obayashi Group Internal Reporting System
We have established a Corporate Ethics Consultation and Reporting System for people associated with the Obayashi Group (employees, seconded employees, employees accepted on assignment, part-time employees, suppliers, etc.). This system serves as a hotline for all types of suspicions and problems relating to corporate ethics in the workplace, including prevention of fraud, harassment, legal violations, pay-offs, bribery, and other types of corruption. Corporate Ethics Committee and Standing Audit & Supervisory Board members are in charge of internal hotline, and we have established an external hotline at a law firm in addition to the internal hotline, making an environment that makes it easy for reporters to use the system by enabling them to choose the means via which they report--by phone, email, or by post. They can report anonymously and Obayashi ensures that reporters are protected against unfair treatment. When a report is received, an investigation is conducted immediately to determine the facts, and the necessary steps are taken.
The Secretariat of the Corporate Ethics Committee also reports the contents of reports, results of investigations, and corrective steps taken to Obayashi's Audit & Supervisory Board Members. The Board of Directors also confirms proper operation of the system and reporting status when confirming the status of establishment and operation of the internal control system.
Introduction, Implementation, Verification, and Improvement on Speciﬁc Measures to Establish Corporate Ethics
In the Corporate Ethics program, Obayashi set out policies and standards, established systems, and introduced specific measures, which we are rigorously implementing.
By periodically inspecting and reviewing the status of their implementation, we strive to continue an enterprise capable of continually maintaining and enhancing its high ethical standards. Board of Directors evaluate the effectiveness of the program once a year at the confirmation process of internal control system.
Rules and manuals for individual aspects of corporate ethics practice
Based on our Corporate Ethics Program, we have set forth and abide by rules and manuals for individual aspects of corporate ethics practice.
- Antimonopoly Act Compliance Program
- Antisocial Forces Exclusion Program
- Obayashi Group Anti-Bribery Program
- Anti-bribery due diligence related to public official or related party (including facilitation payment matters)
- Harassment Prevention Guidelines
- Rules for the Preventing Insider Trading
- Human Resources related rules and regulations
- Occupational Health and Safety Manual
- Quality Manual
Training to establish corporate ethics
Workplace training on corporate ethics takes place in April and May each year for all officers and employees (including employees accepted on assignment, seconded employees, and part-time employees). The training uses a textbook produced by the Secretariat of the Corporate Ethics Committee. At the training using a format of discussion within each department, participants look at specific cases that could potentially happen in their contexts. Example themes include compliance with laws and regulations such as the Antimonopoly Act of Japan, avoiding all contact with antisocial forces, and stamping out illegitimate accounting practices, based on Obayashi's Articles of Incorporation and the Obayashi Code of Conduct for ensuring strict adherence to corporate ethics.
We also have trainings for officers, employees working overseas, conducting education and training programs in accordance with the laws, regulations, and regional characteristics of each country. Group companies provide training based on the text used by Obayashi with the necessary revisions to the content according to the characteristics of the business areas in which each company operates.
Structure to disseminate corporate ethics, measure the extent of adherence to them, and assess their efﬁcacy
We monitor the implementation of our corporate ethics programs, including the Bid-Rigging Monitoring. Program conducted by the Audit Committee and monitoring of internal audits by the Business Administration Department.
In order to incorporate assessments from independent parties, Corporate Ethics Committee's members include a corporate attorney, outside authority and the head of the employees' union. Group companies have also established similar committees, and systems are in place for promoting corporate ethics.
Implement Rigorous Compliance
On October 22, 2018, Obayashi was found guilty of violating the Antimonopoly Act in bidding related to constructing the Chuo Shinkansen maglev line. We were ordered to pay a fine of ¥200 million. Along with that, we were forced to suspend business for the period February 2-June 1, 2019. The disciplinary measures, which were based on the Construction Business Act, applied to all private-sector civil engineering projects in Japan. Our Antimonopoly Act Compliance Program dates back to 2006. It is a matter of grave concern to us that this incident could happen in spite of this program and Group-wide efforts to implement rigorous compliance. Thus, we will be taking the following recurrence prevention initiatives to promote business operations that put the highest priority on compliance.
Additional Policies in Force Since June 1, 2018
We have added the below into our Antimonopoly Act Compliance Program in June 1, 2018.
|Stronger rules concerning contact with industry peers||
|Promoting correct understanding of the Antimonopoly Act||
|Eliminate the psychological factors that cause managers and employees to commit violations or overlook them||
Third-Party Committee Established and Recurrence Prevention Measures Taken in Line with Its Recommendations
We established a third-party committee on September 1, 2018 to conduct an objective inquiry on the causes of the maglev line bidding incident and propose effective measures to prevent recurrence. The committee was established following the Japan Federation of Bar Associations' "Guidelines for establishing a third-party committee in response to corporate misconduct." On January 31, 2019, we accepted the committee's investigative report, including its recommendations for preventing recurrence.
We take the recommendations of the third-party committee very seriously and are implementing recurrence prevention measures as below in line with the recommendations. (These were decided on at a Board of Directors meeting in February 2019 and have been enforced sequentially.)