[Press Conference] KNT-CTH President Yoneda emphasizes that fraud prevention is the human power of employees|Who creates the corporate culture that creates fraud?

2023.09.25

At a press conference on the afternoon of September 20, 2023, KNT-CT Holdings explained measures to prevent recurrence and the status of discussions with local governments regarding the overbilling of local governments in the new coronavirus vaccine project of Japan Tourist, which has resulted in multiple arrests. The editorial department watched it on ZOOM.

The press conference was attended by three people: KNT-CT Holdings President Yoneda (center), Senior Managing Director Koyama (left), and Japan Tourist President Uryu (right). First, Yoneda explained that "reform of people (awareness)" is an important axis of the three basic policies for measures to prevent recurrence, and that it will implement "business reform" and "organizational reform" to create a corporate culture that prevents fraud.

Next, Senior Managing Director Koyama explained specific measures. In the area of human resource reform, we will promote compliance reform through employee awareness surveys and analysis of their state of awareness. He explained that he will comply with management's compliance, reform internal communication, establish the Group Code of Conduct, educate employees, and reform the personnel structure. Next, "business reform" involves the development of business flows and manuals, the formulation of contract guidelines with public organizations, and the introduction of contract evaluation tools. He explained the "organizational reforms" that include the establishment of a compliance committee, the strengthening of the supervisory and executive functions of management, and the reform of the budget target system for employees.

As for measures to prevent recurrence, there is an impression that measures that are taken for granted as a company participating in public works projects at the tens of billions of yen level are lined up. In addition, KNT-CT Holdings declaration It is also included in corporate social responsibility policies such as sustainability, SDGs, and ESG, and it can be said that fraud would not have occurred if it had been complied with. The modern version of corporate social responsibility is branded as an SDGs wash if it fails to comply with it as it is, even if it is "clean" (editorial department)

After explaining the measures to prevent recurrence, President Uryu explained the progress regarding fraudulent issue claims to local governments. Discussions with local governments are still ongoing, and the scale of overbilling has reached a maximum of about 700 million yen in up to 37 municipalities, down from about 900 million yen in 50 municipalities as of the announcement on August 9. "The decrease of 200 million yen is due to discussions with local governments and finding that there was no overcharge," said KNT-CT Holdings' Public Relations Department. At present, 360 million yen has been refunded to the 14 municipalities that have been confirmed to be overcharged.

At the press conference, it was desirable to first explain the overbilling related to the public, and then explain the measures to prevent recurrence. The handout states, "We will focus on preventing recurrence ~ in order to restore the trust of society as a whole, including shareholders and investors, business partners, and related parties." It was an injustice that occurred in the vaccine project of the municipality, but it seems that the apology to the public and local citizens was neglected. Is this because the organizer of the press conference is not Japan Tourist on the consumer side, but KNT-CT Holdings, which is always conscious of shareholders? However, this time the fraud occurred in the near future. In that case, the first thing to do is to apologize to consumers. In addition, the explanation of measures to prevent recurrence was lengthy, and the overcharge was added later, and the impression seemed to be diluted. Crisis Management Public Relations Techniques That Limit Damage Can Reveal Dishonesty (Editorial Department)

Main Q&A

What kind of business will you strengthen in the future?: President Yoneda cited regional revitalization and school projects, saying, "We have received requests from schools for MTB and e-sports, which are particularly promising for club activities and cannot be taught by teachers," and that regional revitalization "takes advantage of the strengths of club tourism."

Wasn't there a group code of conduct until now?: President Yoneda said, "This is the first time, and in the past, we had a corporate philosophy and various other things, and we had employees recite them at morning meetings, but this time something like this happened," and "The company is a public institution of society. Be right as a person. I want to instill in our employees the Analects, Bushido, and the way of the people."

What measures can be taken to detect signs of fraud?: President Yoneda said, "There is a good service for e-mail and chat monitoring systems, and although it is not company-wide, we are considering introducing it. However, this kind of thing needs to be agreed upon by the employees."

What is the reaction to the former employee admitting to the crime at the first trial of the Higashiosaka City overbilling case?: President Yoneda replied, "I don't know the contents of the trial today because I am preparing for a press conference and traveling."; President Uryu said, "I was originally in charge of IT at Holdings, and I am indirectly responsible for this case. I think that fraud could have been prevented if IT had been advanced," and "Honest work is more important for employees than profit."

Prosecutors have pointed out the possibility that there may have been inflated claims before 2019, but do you intend to conduct an internal investigation?: President Yoneda replied, "This fraud occurred during the Corona disaster, when I lost my job in the travel department and participated in a local government project, and although we have been conducting an internal investigation for three years since FY2020, we have no plans to conduct an investigation before FY2019."

Isn't the overbilling case in various places an injustice as an organization?: President Yoneda replied, "There is no such thing as an organization, and each branch employee made a decision." In the questioning by a reporter from a national newspaper (although it is not clear whether the question was held in advance), I felt that it was the intention of this press conference to conclude the question of whether the individual overbilling cases were organizational or individual employee problems.

Who creates a corporate culture that induces fraud?

During the Q&A session, President Yoneda emphasized the importance of the "human power" of employees in preventing fraud. Specifically, he explained in terms of "ethics," "self-control," "relationships with working people," and "intelligence and culture."

On the other hand, there was no detailed explanation of the responsibilities and initiatives of the management themselves. The former president of Japan Tourist took responsibility for the incident and resigned on August 31. As a result, it can be considered that the responsibility of the current management has come to an end.

In the Q&A session, President Yoneda insisted that it was "not systematic fraud." If a corporate culture free of fraud is fostered through human reform, it means that the corporate culture will become the cause of fraud.
What is the corporate culture? Isn't it a culture that is formed under the leadership of management and upper management? From the time employees join the company, they are influenced by the instructions and intentions of their managers and superiors, and they themselves are the shapers of the corporate culture.

From this point of view, it can be said that this case contains an organizational element. Of course, this does not mean that the management will be legally charged. However, it was uncomfortable that the management took the initiative in the press conference to use sensitive words that questioned the human abilities of the 4,000 employees.

In March of this year, President Yoneda was unofficially appointed president of Kintetsu Group Holdings, the parent company of KNT-CT Holdings, but he remained in his current position after Kintetsu's request for an issue was discovered. In the second half of the press conference, President Yoneda said, "I would like to hold press conferences on a regular basis in the future, and I want many people to know about this event."