Introduction
The "Iwaki Credit Union (Iwaki Shinkumi)The scandal involving "."
Are you aware of the reports that the investigation by the "third-party committee" tasked with uncovering the truth about fraudulent loans and funding of anti-social forces has inexplicably stalled?
"Why is the truth being obscured even after bringing in external experts?"
"Is the committee really functioning?"
This question is an important point that prompts us, the general reader, to think deeply about the nature of organizations and the nature of "truth."
This article uses the case of Iwaki Shinkumi as an example."What is a third-party committee?", "Why do investigations often prove difficult?", and "How can organizations exercise self-correcting mechanisms?"I will now explain the core issue.
A third-party committee is not a panacea. Without self-correcting mechanisms, it will become dysfunctional.
The most important conclusion that can be drawn from the case of Iwaki Shinkumi is,"The establishment of a third-party committee is not enough; the 'self-correcting mechanism' of the organization being investigated is essential."That's the point.
A third-party committee is a mechanism used when a company commits misconduct, bringing together external experts (lawyers, certified public accountants, academics, etc.) to conduct an independent investigation. Its purpose is to reveal objective facts and propose measures to prevent recurrence.
However, in the case of Iwaki Credit Union, this committee was not able to fully exercise its inherent capabilities.
- Uncooperative former executives: Facts were concealed and false explanations were given during the investigation.
- Physical sabotage: There are even suspicions that evidence, such as a computer, was destroyed with a hammer.
- Existence of unaccounted-for funds: Although there is evidence of fraudulent lending over approximately 20 years, the full extent of the unaccounted-for funds, amounting to between 8.5 billion and 10 billion yen, has not yet been clarified.
These actions can be seen as a result of the investigative committee abandoning its own responsibility for "organizational self-purification" and instead using it merely as a "tool to deceive the public."
The committee is a "mirror."
When an organization tries to face its issues honestly, that honesty is clearly reflected. However, if an organization chooses concealment or deception, that mirror shatters, and the truth can no longer be seen. The case of Iwaki Shinkumi teaches us the lesson that it was not a **"problem with the investigation methodology,"** but rather a **problem with the organization's attitude**.
Reasons why the investigation is proving difficult and specific actions the committee should take.
So, what should a third-party committee do if the subjects of an investigation do not cooperate? Let's look at some specific points based on the case of Iwaki Shinkumi and the advice of experts.
1. The limitations of the committee and the role of "special investigations"
Third-party committees do not possess legal investigative powers. They cannot forcibly examine evidence or arrest suspects. Therefore, their investigations are supported by "trust with the client (company)" and "cooperation with the subjects."
At Iwaki Credit Union, after the initial third-party committee felt it had reached its limits, a "Special Investigation Committee" with more powerful authority was established. The breakthrough here came with the discovery of **"recorded phone conversations between former executives and anti-social forces"**.
Simply listening to people in a conference room is not enough; going to the scene and thoroughly examining physical evidence is essential to uncovering the truth.
2. The committee's "resignation" is also an important report.
Professor Emeritus Shinji Hatta of Aoyama Gakuin University points out that if the person being investigated continues to lie or deceive, the committee should offer the option of **"withdrawing from the investigation (resigning)**.
- The meaning of the resignation: The committee's resignation is not an indication of a lack of investigative ability, but rather an act of demonstrating to society the fact that "this organization has abandoned its self-correcting mechanism and is incapable of investigation."
- A chain reaction of sanctions: The act of resignation itself puts pressure on management, which in turn can lead to social sanctions (such as business improvement orders from the Financial Services Agency or suspension of new loans).
3. Transparency in the selection of committee members is the source of trust.
For a third-party committee to function effectively, it is essential to have complete transparency regarding "who was selected and why."
- Disclosure of the selection process: What criteria were used to select the committee members?
- Disclosure of compensation: How much compensation is paid to the committee members?
The role of "outside directors," who are easily influenced by management, is also important. When outside directors and auditors proactively oversee the committee and take responsibility for receiving and publishing the report, the committee's independence and credibility are enhanced.
Experts' perspectives on how to uncover the "truth" and points to be aware of.
Attorney Kentaro Sadahiro, who assisted the Iwaki Credit Union's special investigation committee, spoke about the difficulties of the investigation as follows:
"It's necessary to visit the scene multiple times, have face-to-face conversations with the subjects, and thoroughly examine the physical evidence."
This relates to the importance of "laying the groundwork" and "reporting, communicating, and consulting" in the workplace.
- A superficial explanation won't do: Don't take explanations like "my computer broke down" at face value; your ability to understand the underlying intentions is crucial.
- A race against time: You need to scrutinize vast amounts of data and point out inconsistencies within a limited timeframe.
Furthermore, the fact that the Financial Services Agency issued a "business improvement order" and suspended lending to new customers demonstrates the reality that **"the results of the investigation directly impact business operations."**
Whether the third-party committee's report becomes something that can be "used for business management" depends on how the people being investigated react to the "truth that may be hard on them."
Summary
The case of Iwaki Credit Union has highlighted to us the "dark side of organizations" and the "difficulty of overcoming it."
A third-party committee is not a "safeguard" to conceal misconduct. It is a "surgical tool" that allows an organization to acknowledge its own wrongdoing and to regenerate, even if it is painful.
The reason a surgical knife fails to function is not because the blade is dull, but because the patient (tissue) resists the anesthesia (concealment) and refuses to cut itself.
The truth isn't something you can always find just by searching for it.
The truth only reveals itself at the point where the relentless determination of those seeking to uncover it and the courage of those who accept it intersect for the first time.
Herein lies an important lesson for those of us who work in this field.
"Transparency" doesn't mean doing anything special; it means not hiding your actions and intentions, but continuously exposing them.
Furthermore, they adopted an attitude of re-evaluating investigations and audits not as "enemies," but as "mirrors" that facilitate their own growth.
The question remains whether Iwaki Credit Union, after overcoming its struggles, can regain its ability to self-correct.
It all depends on who receives the hammer of "truth" that is now before them, and how they receive it.
