Investigation Results and Corporate Action Plan
Regarding Compliance Reporting Issues
(January 8, 2008)
OSAKA, JAPAN - January 8, 2008 - TOYO TIRE & RUBBER CO., LTD. (TTR, President and CEO: Kenji Nakakura) today issued its findings from an internal investigation into the company's urethane-based heat-resistant building construction material business, and announced an action plan to ensure future compliance with all laws, regulations, company policies and rules. TTR had previously disclosed a compliance reporting issue that had been discovered at this business unit (see November 7, 2007 TTR press release).
The investigation was performed by an internal fact-finding committee with oversight by a panel of independent, outside experts. The committee first determined the causes and circumstances that led to this compliance issue, and made recommendations to management on an action plan to eliminate the likelihood of its recurrence. On December 26, the committee made its report to TTR's Board of Directors, and to the Ministry of Land, Infrastructure and Transport of Japan.
Causes: The committee identified weaknesses in TTR's existing organizational structure, functions, and culture that caused a breakdown in proper corporate governance. Those weaknesses, combined with an inadequate awareness among employees that compliance with laws, regulations, policies and rules are important, contributed to the occurrence of this compliance issue.
Action Plan: To address those weaknesses and inadequacies, the committee recommended the following permanent measures, all of which have or are being implemented:
- Create an independent Product Quality Audit Office with direct reporting to the President.
- Conduct routine and periodic compliance audits.
- Develop and implement a corporate code of conduct.
- Appoint compliance leaders throughout the organization.
- Provide routine and periodic training to all employees in legal and regulatory compliance.
- Promote employee reporting of compliance irregularities.
- Periodically rotate personnel among business units.
- Improve and strengthen business decision-making processes in regard to investments in new business ventures and products.
In addition to the management changes that were previously announced (see November 29, 2007 TTR press release), certain corporate officers and auditors will receive a temporary pay reduction over this compliance issue.
Through these steps, TTR is renewing its commitment to all of its shareholders and customers its pledge to act responsibly and with integrity under the company's principles of Corporate Social Responsibility. Henceforth, all Toyo employees will be re-dedicating themselves towards regaining the public's trust.