The compliance reporting issue in question was made public in November 2007, and its rectification will cost the company as much as £17.52 million.

The investigation was performed by an internal fact-finding committee with oversight by a panel of independent, third party 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 Dec. 26, the committee made its report to Toyo’s Board of Directors, and to Japan’s Ministry of Land, Infrastructure and Transport.

The committee identified weaknesses in Toyo’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.

To address those shortcomings, the committee recommended the following permanent measures, all of which have or are being implemented: The creation of an independent product quality audit office with direct reporting to the president; conducting routine and periodic compliance audits; developing and implementing a corporate code of conduct; appointing compliance leaders throughout the organization; providing routine and periodic training to all employees in legal and regulatory compliance; promoting employee reporting of compliance irregularities; periodically rotating personnel among business units; and improving and strengthening business decision-making processes in regard to investments in new business ventures and products.

In addition to previously announced management changes, certain corporate officers and auditors will receive a temporary pay reduction over this compliance issue. Toyo believes the measures it is taking are crucial in renewing its commitment to all shareholders and customers, and view it as a pledge to act responsibly and with integrity under the company’s principles of Corporate Social Responsibility. Henceforth, reports Toyo, all company employees will re-dedicate themselves towards regaining the public’s trust. (Tyres& Accessories/Staffordshire, U.K.)