Promoting Compliance

Spreading Awareness of the Charter of Corporate Behavior and Code of Conduct

The Toyo Tire Group compiled not only the “Toyo Tire Group Charter of Corporate Behavior” as corporate action principles applied uniformly across the Group in order faithfully conduct business activities but also the “Toyo Tire Group Code of Conduct” for each director and employee to put the charter into practice. Taking into the consideration differences in laws, regulations, and customs between countries and regions, the various overseas Group companies have created independent codes of conduct using the code of conduct as action guidelines.
In Japan, reading aloud the Code of Conduct Handbook, which was developed as a tool to spread the code of conduct, is done by all corporate officers and employees, including those at Group companies, and after completing the training, participants submit a pledge that states they will promote compliance. In fiscal 2017, all employees received the training and submitted pledges.
Overseas, the Code of Conduct Handbook has been translated into seven languages (English, Russian, German, Italian, Chinese, Thai, and Malaysian) and distributed to all business sites. We are working to spread the code of conduct throughout the Group and reinforce compliance.
Other efforts to reinforce compliance include a monthly message from the Chief Compliance Officer, sending of compliance communiques to increase awareness, providing e-learning, and conducting compliance awareness surveys.

TOPIC
Results of the FY2017 Compliance Survey *Response rate 93.0% [90.4% for 2016]

  1. Conducting compliance promotion activities
  • Conducted at least one activity to raise compliance awareness within the last year, 97% (88% in FY 2016)
  1. Awareness and understanding of compliance

Know the meaning of compliance, 85% (83% in FY 2016)

  • * Toyo Tire Group’s compliance: We shall comply with laws and internal rules in all aspects of our business activities and shall conduct ourselves according to the highest ethical standards.
  1. Making compliance part of the corporate character

Conscious of compliance when conducting your work, 94% (92% in FY 2016)

Comment

There is growing awareness of compliance among employees, including a larger number of workplaces enthusiastically engaged in compliance activities and a greater number of communication opportunities within the workplace.
On the other hand, there are still not only gaps in compliance awareness among management but also some who feel that “it is not an environment where advice can be readily sought.” Our goal is to continue to review our training and education activities and to increase and firmly root a strong compliance awareness among all employees through communication at all workplaces.

Ryo Imada,
Compliance & Legal Division
Compliance Dept.,Toyo Tire Corporation

Internal Reporting System

We have been operating an internal reporting system since fiscal 2006. “Reporting Hotlines” have been established in Toyo Tire Corporation Audit Department, an independent law office, and independent specialized companies as an in-house whistle blower system. Not only employees but also business partners can use the system, and reports can also be made anonymously. Overseas, we are moving forward with efforts to establish hotlines at each business site.
There is greater awareness of the “Reporting Hotlines” in Japan as a result of a call to promote usage by distributing cards, displaying posters, and issuing internal monthly compliance communiques.

Awareness of domestic hotline consultation service

Awareness of domestic hotline consultation service

Preventing Anti-Competitive Behavior

We are moving forward with the building of a compliance system, conducting educational activities, etc., in order to thoroughly comply with competition related laws and ordinances in all countries. As for concrete measures, sales staff are required to submit a prior request to meet with competitors, a post-meeting report of request for exemption, and a pledge to adhere to antimonopoly laws in line with the “Cartel Prevention Rules”. In addition, we are actively working to comply with laws and ordinances, and these efforts include establishing an Antimonopoly Law Compliance Hotline, having the Audit Department conduct audits of the compliance status with Cartel Prevention Rules, and providing training, including e-learning, to related parties.
A class action suit was filed seeking damages and other relief related to a violation of U.S. antitrust law disclosed in 2013, and in September 2017, a settlement was reached with some of the plaintiffs. The suit concerns actions taken before May 2012, which was the subject of an investigation by the U.S. Justice Department. No actions have subsequently been identified as possible new violations.

Anti-Corruption

In addition to prohibiting all corrupt practices that could lead to misconduct, violations of laws, and breach of trust in our business activities, we strive to avoid all negative impacts, such as poverty in transition economies, damage to the environment, abuse of human rights, abuse of democracy, misallocation of investments, and undermining the rule of law, etc., that could arise from corrupt practices.
The risk of corruption in countries and regions in which the Group has business sites is evaluated using the fiscal 2017 Corruption Perceptions Index (CPI) surveyed and published by the international NGO, Transparency International. We believe caution be required in particular for business activities in countries with a CPI of less than 40.

We are conducting educational activities at a time when regulations related to corrupt acts, particularly bribery, are being reinforced around the world. Between fiscal 2016 and fiscal 2017, in Japan, Malaysia, Thailand, and China, attorneys from local law offices were invited to serve as instructors for anti-corruption seminars.

Status of Legal Compliance in the Environment, Social, and Economic Fields

In fiscal 2017, we were not subject to any significant fines or non-monetary sanctions for non-compliance with environmental laws and regulations.
As for significant fines and non-monetary sanctions As for significant fines and non-monetary sanctions for non-compliance with laws and/or regulations in the social and economic area during fiscal 2017, a subsidiary was found guilty and fined 10 million yen by a summary court in December 2017 for misconduct related to seismic isolation rubber for construction produced and sold by the Company and its subsidiary that came to light in 2015. The sentence was upheld, and the subsidiary has completed payment of the fine. We have seriously and earnestly accepted this ruling and we are working to implement preventive measures, centered on “improving quality assurance and strengthening compliance awareness” and “continuous improvement and expansion of the corporate platform” so that these problems never occur again. As of the end of March 2018, repairs had been started on 94 of 154 structures, and the replacement of products have been completed on 78 structures.

Incidents of Non-compliance concerning the Health and Safety Impacts of Products and Services

In February 2017, in our efforts to prevent reoccurrences of past misconduct caused by the Company and its subsidiaries, a problem related to inspectors failing to measure some industrial-use rubber products (seat rings*) manufactured and sold to particular customers by the Company and its subsidiary and past inspection data being improperly reported came to light. Taking this incident seriously, we quickly determined the cause and established preventive measures.
An inspection of all completed parts (butterfly valves) conducted by the customer confirmed that there were no problems with the operation or characteristics of the delivered products, and there have been no reports to date of defects related to the products, accidents caused by the products, etc.

In fiscal 2017, there were no incidents of non-compliance concerning product and service
information and labeling, no incidents of non-compliance concerning marketing communications, and no substantiated complaints concerning breaches of customer privacy and losses of customer data.

  • * Seat ring: a valve seat used in pipe valves. When stopping the flow of liquids, the valve is rotated, and the elastic nature of the seat ring results in gaps between the valve (and the pipe) being filled. They are primarily used in conveyance pipes for tankers, etc.