Evidence No.30

Formal Report to the Financial Services Agency

Submission Date: March 10, 2025 (Reiwa 7)

Submitted by: Shunsuke Kimura

1. Violation of the Corporate Governance Code (Failure of Management Oversight Responsibilities)

Maeda Corporation neglected proper management of the working environment, allowing workplace harassment and concealment of industrial accidents to persist continuously, and failed to take appropriate corrective measures. As a result, the company’s management is considered to have violated the supervisory responsibilities of the board of directors and the obligation to strengthen internal controls under the Corporate Governance Code.

Violated Provisions:

• Principle 4-3 (Responsibilities of the Board of Directors): Failed to fulfill supervisory duties for sustainable corporate growth.
• Supplementary Principle 4-3-2 (Risk Management): Failed to properly manage labor accident risks, damaging corporate credibility.
• Principle 2-2 (Corporate Ethics): Damaged corporate ethics due to inadequate responses to labor accident concealment and harassment issues.
• Principle 4-4 (Independence and Effectiveness of Audits): Audit committee failed to function, leading to a breakdown of internal controls.
• Principle 4-11 (Composition of the Board of Directors): Lack of independence within the board of directors, resulting in self-protective decision-making.
• Principle 5-2 (Transparency of Management Strategy): Failed to properly disclose information concerning long-term sustainability of the company.

Specific Examples of Management Oversight Failures:

• Since October 2022, multiple reports of power harassment were made but ignored by management.
• A report suggesting disciplinary action against the whistleblower was prepared as retaliation.
• Labor accident claims were obstructed, forcing employees to rely on sickness allowance benefits. In July 2024, the company explained that sickness allowance would be applied, leaving records in the attendance log indicating “sickness leave” after paid leave exhaustion.

2. Misrepresentation in Financial Reporting and Responsibility of the Audit Firm

By obstructing labor accident claims and coercing employees to use sickness allowance benefits, Maeda Corporation may have avoided recording labor accident-related costs in its financial statements. This raises suspicion of violations of financial reporting standards.

Details of Supervisory Guideline Violations:

• Guideline 3-2-1 (Accuracy of Financial Statements): Potential false statements due to omission of labor accident-related costs.
• Guideline 3-5-2 (Internal Controls): Concealment of labor accident information within the company impaired transparency of financial reporting.
• Guideline 3-7-1 (Prevention of Window-Dressing): Possible falsified financial reporting in FY2022 and FY2023 due to labor accident concealment, affecting personnel costs and provisions for damages.
• Guideline 3-8-2 (Compliance Enhancement): Company lawyers advised and considered retaliatory measures against the whistleblower, resulting in failure of an effective internal reporting system.

Furthermore, it is possible that appropriate checks by the audit firm were not conducted, raising suspicion of audit standard violations. Strict investigation by the FSA is necessary. In particular, there is strong suspicion of falsified financial reporting in FY2022 and FY2023 due to concealment of labor accidents.

3. Dysfunction of the Internal Reporting System

History of Whistleblowing and Response:

• In November 2024, a report was submitted through the company’s internal reporting system to the compliance department, but no appropriate measures were taken. This whistleblowing occurred after the case had already come to light.
• Despite an investigation period exceeding two months, the company ultimately denied all evidence and recorded in the internal investigation report that it considered disciplinary action against the whistleblower.

Retaliatory Measures Against the Whistleblower:

• On December 27, 2024, an email recorded that retaliatory measures were considered based on advice from the company’s lawyer. The whistleblower was also threatened with disciplinary action.
• The company took no corrective measures in response to the whistleblowing and instead continued to consider countermeasures such as disciplinary action.

4. Request to the Financial Services Agency for Investigation and Response

Investigation of Financial Reporting Misrepresentation

① Conduct a focused investigation into possible false statements in Maeda Corporation’s financial reports regarding labor accident-related costs.

② If the audit firm overlooked such false statements, pursue responsibility as an audit standards violation.

Investigation of Corporate Governance and Internal Controls

③ In cooperation with the stock exchange, examine potential violations of timely disclosure obligations and require proper disclosure to financial institutions and business partners.

④ Conduct an urgent hearing with Maeda Corporation.

⑤ Order re-audit of financial statements for FY2022–FY2024.

⑥ Investigate responsibility of the audit firm and broader impacts on the auditing industry.

Impact on Financial Markets

⑦ As delayed response undermines trust of investors and business partners, prompt investigation is required.

⑧ There may be spillover effects on risk management of financial institutions, thus appropriate investigation is also needed from the perspective of ensuring stability of financial markets.

We hereby respectfully request appropriate action.

📎 The original Japanese evidence document (PDF) is attached below for reference.