Bridgestone Quits Marine Hose Business due to “Improper Payments”

According to the content of a statement released by Bridgestone on February 12, the company’s internal inquiry into the now well known international marine hose cartel has uncovered a number of occurrences of what Bridgestone calls “improper monetary payments.” These payments were made to foreign agents, including government officials. Other “possible forms of improper payments” were also reported.

The European Commission, US Department of Justice, the Fair Trade Commission of Japan and other authorities have been investigating Bridgestone Corporation since last May due to suspicions of the company’s involvement in the marine hose cartel. Bridgestone, in its February 12 statement, wishes to clarify that the act of making improper payments to foreign agents, which will possibly be paid to government officers and other customer representatives, is a serious violation of its compliance rules. “Such acts betray the confidence that customers, shareholders and business counterparts have in our company,” declares Bridgestone. “We solemnly apologise for all such acts.”

An issue with more serious potential repercussions for Bridgestone is that, if the agents made payments to representatives of overseas governments, there is a possibility that such acts constitute breaches of the Unfair Competition Prevention Law of Japan, the law prohibiting the bribery of foreign officials. The company may also have breached similar laws in other countries. According to Bridgestone these matters are being taken seriously, and the company says it has reported the to-date results of its investigation to Japan’s public prosecutor’s office. The investigation will continue, adds Bridgestone, and findings will periodically be reported to the relevant authorities. Should the public prosecutor decide to investigate Bridgestone, the company states it will provide full cooperation, as is currently the case with the US Department of Justice.

The investigation has also uncovered inappropriate payments not linked to the marine hose cartel. “As our investigation proceeds, we are also finding similar instances in relation to other industrial products sold by Bridgestone Corporation,” the company states. “The investigation is continuing and could expand.”

One notable measure Bridgestone is taking to prevent similar future occurrences is to withdraw from the marine hose business: “As a general principle, we will not take new orders. However, in order to minimise trouble to our customers, we will continue required services for those who continue to use our products and will do our best to assist such customers to change to other vendors.” Compliance education for employees, a more stringent decision making system for bidding and reinforced internal controls will also be introduced.