Lawyer Monthly - March 2022

EXPERT INSIGHT 62 WWW.LAWYER-MONTHLY.COM | MAR 2022 About Yoshie Midorikawa Yoshie Midorikawa was admitted to the Bar in Japan in 2007 and New York in 2015. Her areas of expertise include many aspects of litigation, alternative dispute resolution, corporate governance and commercial disputes, and her insights on Japanese law have been published widely. About Miura & Partners Miura & Partners was established in 2019 as an independent law firm in Tokyo with the aim of creating a new platform for innovative and businessminded professionals. Ever since, the team has handled various cutting-edge cases in the areas of investigations and commercial disputes. Asian Legal Business has listed Miura & Partners as one of the FAST 30: Asia’s fastestgrowing firms in 2021. Yoshie Midorikawa Partner, Miura & Partners 3F East Tower Otemachi First Square 1-5-1, Otemachi, Chiyoda-ku, Tokyo 100-0004 Tel: +81-3-6270-3515 Fax: +81-3-6270-3501 E: yoshie.midorikawa In practice, investigation committees of Japanese companies that operate globally usually explain to the interviewee that attorney-client privilege belongs to the company if it applies, but not to the interviewee (i.e. an employee or a director) in case attorney-client privilege is recognised in other jurisdictions. In such cases, the relevant documents prepared through the voluntary investigation are marked as “privileged and confidential” to be protected in other jurisdictions. Another legal issue which companies should be mindful of is the managerial responsibilities of independent directors, who are not executive directors and are often professionals like lawyers, accountants and professors. In a recent fraud case, the committee’s report identified that some independent directors failed to fulfill their managerial responsibilities to prevent the fraud. It was not common for reports of an investigation committee to find that independent directors were responsible for the fraud. Now that the Companies Act and the Corporate Governance Code of Japan require listed Japanese companies to appoint independent directors, both they and executive directors should be aware of their potential legal liabilities in case of fraud at the company. How are plea bargains handled in the Japanese legal system? In Japan, a plea-bargaining scheme was introduced in 2018. This new scheme was intended to press charges against a high-ranking criminal with the witness evidence provided by lower-ranked criminals in exchange for dropping their criminal charges. There have been only a few such cases so far in Japan. Unfortunately, the scheme was used for prosecuting an employee in the very first case. In this case, the company benefited from the plea-bargaining scheme by giving statements to prosecute its former officer in a bribery case. The second case was the false accounting scandal by Carlos Ghosn, the former CEO of Nissan, which attracted widespread attention from the media. This time, the scheme worked as it was intended. A lower-ranked official made a statement to prosecute the former CEO. However, we are concerned that Japanese courts showed a rather cautious attitude towards the witness evidence provided through the pleabargaining scheme in some cases. What are some of your firsthand experiences of fraud investigations? Every time I take part in an investigation, I recall an investigation case in which a government agency committed fraud on the public pension fund. The investigation committee appointed by the Ministry of Health, Labour and Welfare (MHLW) conducted countless interviews with officials as well as the victims of the fraud, which enabled us to reach the origin of the fraud and the techniques that had been used to conceal the fraudulent activity for years. As a lawyer in the early stages of my career, I learned a lot from the exceptionally talented committee members. After the investigation, the government agency was reorganised and replaced by a new agency to prevent further fraudulent activities. The investigation contributed to improving the public trust of the government pension fund. Japan is facing the challenges of an aging society much earlier than other advanced countries, and the government pension fund is an irreplaceable social safety net for the public. It was fulfilling to find that our efforts made some contribution to improving the system. It is important for the suspected company to commence its own investigation voluntarily to show good faith to the market and consumers even before the beginning of governmental investigations.

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