2️⃣ Actor-Based Records – MUFG (Mega Bank)

🟦 Response of Financial Institutions (MUFG Case)

🔷 Failure of Supplementary Functions in the Financial Sector (Lending & Governance Monitoring)

This page presents a structural record of whistleblower system failures in Japan’s major financial institutions.

Focusing on the Mitsubishi UFJ Financial Group (MUFG), this report documents a three-stage sequence identified through its accounting audit hotline (via Hokusei Law Office):

Reception → Coordination → Cut-off.

This pattern illustrates the hollowing out of whistleblower protection mechanisms in the financial sector and a failure in governance monitoring, despite being Japan’s largest financial group.

Scope: Records centered on MUFG’s Accounting Audit Hotline (via Hokusei Law Office)
Classification: Non-compliance with the OECD Guidelines for Multinational Enterprises

– Chapter II, A7 (Internal Controls)

– Chapter II, B13–14 (Due Diligence)

– Chapter VIII, 1 (Communication)

Symbolic Importance: The structural disengagement by Japan’s top-tier financial institution severely undermines confidence in the country’s financial governance system.

🔷 Chapter 1: Expected Supplementary Roles of Financial Institutions

⚖️ Ongoing Monitoring of Governance and Internal Control Risks in Lending Recipients

… Even when administrative bodies fail, financial institutions are expected to assess governance risks and induce reforms through lending criteria and transaction oversight.

🛡️ Deterrence through Financial Incentives (Loan Conditions, Escalation Mechanisms)

… Whistleblower reports or accounting irregularities should trigger credit reassessment and conditional financing to drive correction.

🧭 Governance Pressure via Market Discipline and Engagement

… As capital market actors, financial institutions bear disclosure duties that should function as external governance levers.

🔷 Chapter 2: Subject Institution and Scope of Records

Item	Details
🏦 Financial Institution	Mitsubishi UFJ Financial Group (MUFG)
🧑‍💼 Responding Entity	Accounting Audit Hotline (via Hokusei Law Office)
📨 Record Scope	10 rounds of email correspondence (May–June 2025) between whistleblower Mr. Shunsuke Kimura and the hotline
🚨 Whistleblowing Themes	Institutional breakdown, retaliatory dismissal, and accounting irregularities such as cost exclusion at Infroneer HD / Maeda Corporation

🔷 Chapter 3: OECD Guidelines vs. Failure of Financial Supplementary Functions

📘 OECD Provision	🔧 Expected Function	❌ Reality	⚠️ Social Impact
Chapter II, A7 (Internal Controls)	Following up on whistleblowing via internal audit systems	Coordination limited to surface-level forwarding; no substantive investigation followed	Dysfunction of internal audit
Chapter II, B13–14 (Due Diligence)	Ongoing risk assessment and remediation of business partners	Willful disengagement after initial acknowledgment; rejected continued dialogue	Abandonment of risk monitoring
Chapter VIII, 1 (Communication)	Effective use and transparency of whistleblowing systems	Explicit refusal to receive further reports, citing “personal data” restrictions	Erosion of public trust

🔵 Callout: Toward Structural Complicity
This pattern demonstrates not merely administrative insufficiency, but a deliberate disengagement from financial oversight obligations.
Despite receiving detailed evidence, regulatory context, and follow-up requests, the institution chose to terminate dialogue unilaterally.
Such conduct constitutes functional complicity through omission, particularly in the context of large-scale accounting and governance failures.

🔷 Supplemental Interpretation (Structural Implications)

The refusal to receive further communications on the pretext of “personal data” protection constitutes a de facto termination of institutional due diligence. This action reflects a systemic breakdown of the whistleblower protection structure, particularly in the follow-up phase, which is crucial for identifying and addressing governance risks.
This record does not allege MUFG to be the primary violator, but rather documents the structural absence of supplementary functions expected from financial institutions in upholding public governance norms and reinforcing whistleblower protection systems.
In the context of the OECD Guidelines, such disengagement undermines the intended function of financial actors as external compliance validators. By terminating communication without evaluating the underlying governance concerns, the institution becomes functionally complicit in regulatory failure.
The case illustrates how financial institutions may evade accountability not by action, but by omission, thereby rendering whistleblower systems ineffective. This omission-based complicity warrants international policy scrutiny, especially when involving Japan’s largest financial group.

🔷 Chapter 4: International Recommendations and Policy Proposals

Mandate structural evaluation of financial institutions’ roles in whistleblower system effectiveness, especially where the institution acts as a passive or secondary actor in high-risk compliance scenarios.
Introduce minimum standards for follow-up after initial whistleblowing intake, including a no-blocking principle prohibiting cut-off responses that neutralize accountability mechanisms.
Require disclosure of whistleblower-handling indicators (e.g., follow-up rates, rejection justifications, system responsiveness) in ESG reporting frameworks and OECD National Contact Point (NCP) disclosures to ensure transparency in market oversight.
Promote international harmonization of whistleblower engagement standards under the OECD Guidelines (Chapter II & VIII) and the UN Guiding Principles on Business and Human Rights (UNGP, Pillar II), ensuring financial institutions cannot bypass obligations through administrative formalities.

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🔷🏦 Report Record: Structural Position of MUFG's Response – Financial Oversight and Whistleblower Limitations

🔷 Supplemental Section: International and Structural Gaps in Financial Oversight

① Systemic Weakness: “Post-Acknowledgment Shutdown” of Financial Channels

❝We ask that you refrain from further communications. Your information has been transferred only to the appropriate division regarding your resignation and protest of dismissal.❞

Issue	Description	OECD Guideline Violation
One-time reception without obligation to follow-up	Financial institutions can formally “accept” a report but shut down future contact, regardless of retaliation or escalation.	Ch. VIII 1 – Violation of good-faith engagement and trust-building
No obligation to monitor after initial transfer	Once a report is passed to internal departments, further responsibility is disclaimed.	Ch. II B14 – Inadequate monitoring of grievance mechanisms

🔵 Result: The system becomes performative, offering no real protection or engagement beyond the first contact.

② Comparative Practices in Other OECD Countries

Country	Financial Role in Whistleblower Oversight	Follow-up Obligation	Remarks
🇺🇸 USA	SEC encourages financial institutions to monitor whistleblower retaliation under SOX & Dodd-Frank	✅ Yes	Strong regulatory expectation
🇫🇷 France	Sapin II Law mandates internal control and follow-up by financial institutions	✅ Yes	Duty to prevent retaliation
🇰🇷 South Korea	Financial firms must follow up under FSC guidance if whistleblower reports retaliation	✅ Yes	Linked to ESG audits
🇯🇵 Japan	No legal obligation to monitor or respond after initial intake	❌ No	Allows communication shutdown

📌 Conclusion: Japan's financial system permits voluntary abandonment of whistleblower oversight—a structural flaw contrary to global norms.

③ Causal Link to Structural Damages (Connection to Report No.7)

❝Had the financial institution upheld even minimal oversight, the chain of retaliation and dismissal might have been stopped.❞

🧾 This justifies Report No.7’s proposed reconstruction cost of JPY 5 to 9 billion (approximately USD 33–62 million) as not merely compensatory, but structurally necessary due to the systemic failure of the internal whistleblower framework.

Financial institutions withdrawing oversight
Collapse of all domestic mechanisms (administrative, corporate, financial)
International norms being disregarded

📌 OECD Reference: Chapter II A7, B13–14 / Chapter VIII 1