Allegations on Sompo Japan Employee Tasked with Factory Manager Duties at Big Motor

On January 30th, Big Motor employee Toshiyuki Kambara (51), who served as a member of the environmental maintenance promotion committee, was arrested by the Kanagawa Prefectural Police on suspicion of property damage. Kambara is alleged to have cut down six roadside trees in front of the store, making him the first arrestee in the roadside tree issue. Additionally, on February 1st, two male employees who had been assisting Kambara in cutting down the roadside trees under his instruction were also referred to prosecutors.

 

Amidst various allegations of misconduct surrounding Big Motor, progress has also been made in the suspicion of insurance fraud. Sompo Japan, which has been reported to have a close relationship with Big Motor, published the final report of an external investigation committee on January 16th. On January 25th, it received a “business improvement order” from the Financial Services Agency, and on the following day, January 26th, a press conference was held to announce the resignation of Kengo Sakurada, Chairman and CEO of the Sompo Holdings Group.

While some may perceive the administrative sanction by the Financial Services Agency as lenient for being an improvement order rather than a suspension order, it brings a sense of relief to stakeholders that one phase has come to a close.

However, according to investigations conducted by the author, there was a fact that was not mentioned in the report. It has long been suspected that Sompo Japan had dispatched several employees to Big Motor, raising suspicions of involvement in fraudulent insurance claims. Despite this, the report did not address this issue.

“After careful examination of relevant materials and findings from interviews, it was not confirmed that the secondee were involved in the fraudulent claims in question.”

But in reality, the secondee were responsible for the role of factory manager at Big Motor. Moreover, the store in question was the flagship store of Big Motor, the Tama store, which was highlighted in an external lawyer’s investigation last year for suspected 122 cases of inappropriate conduct.

Prior to this shocking revelation, let’s first clarify the relationship between Sompo Japan and Big Motor. Sompo Japan began dispatching secondee to the panel beating and painting department of Big Motor in May 2015, and by January 2023, a total of seven secondee with adjuster qualifications had been dispatched.

Such capable individuals overlooking fraudulent claims seems unlikely, yet it’s often heard that they were compelled to turn a blind eye. According to the report from the Financial Services Agency, “some of the secondee were aware of events suspected of involving fraudulent claims or misconduct, and continuously reported them to Sompo Japan’s sales and insurance service departments.”

However, the sales and insurance service departments of Sompo Japan, upon receiving these reports, were not functioning properly. In fact, the Financial Services Agency pointed out that “there was a reality of neglecting to implement strict guidance and investigations for fear of backlash from Big Motor, as well as concerns about its impact on sales performance and profits” and also that “the legal and compliance departments, in a position to exercise restraint, had not established an investigation system for fraudulent claims.” While there were individuals within Sompo Japan who responded with firmness, as an organization, prioritizing profit may have significantly contributed to fostering misconduct at Big Motor.

The preamble has been long, but if we consider that the secondee were merely in a supportive role and did not have decision-making authority, then it doesn’t seem incorrect that the final report stated “there was no evidence of involvement in misconduct by the secondee”. However, if a secondee from Sompo Japan was in the position of the head of the sheet metal and painting department, the situation changes. Moreover, the fact that the Tama store, which was among the top nationwide, had suspicions of misconduct adds another layer. A former employee of Big Motor who is well acquainted with the situation reveals this.

 

“Mr. A, the supporter, worked as the factory manager from around the end of 2015 to January 2016. It was for a period of about two months. Mr. A was a very diligent and capable adjuster. Officially, his title was not factory manager. However, since there was no other sheet metal factory manager at the Tama store at that time, regardless of the title, it is certain that Mr. A was effectively the factory manager.

There was no provision in the contract with Sompo Japan for appointments to key positions, and I heard that the appointment was made by Big Motor. Mr. A was reluctantly performing the duties of the factory manager. I don’t know whether any misconduct occurred during that time. Mr. A had been expressing his desire to ‘step down from the role of factory manager’ for some time. Sompo Japan understood the situation and made a request to Big Motor to relieve Mr. A of the duties of factory manager, which was granted.”

If a secondee occupied a key position even for a short period, the possibility of involvement in misconduct naturally increases. So, was there really no involvement of the secondee in any wrongdoing? Moreover, why wasn’t this fact included in the final report? When we contacted Sompo Japan regarding these matters, we received the following response by the deadline.

“The employee in question served as the factory manager for a period of two months. However, according to the investigation report by an external investigation committee, ‘no evidence was found to suggest the involvement of our secondees in fraudulent claims.’ Furthermore, regarding the investigation report, it was created based on the investigation and factual determination by the exclusive authority of the external investigation committee, and we do not have a position to comment on the factual determination or contents of the report made by the committee.”

I also sent a letter of inquiry to Big Motor regarding Mr. A’s tenure as factory manager, but they responded with, “We are currently in the process of confirming the facts.”

Big Motor and Sompo Japan were supposed to reach a certain conclusion. However, not all aspects of the suspicious relationship have been fully clarified. In order to achieve corporate reconstruction, all issues should be addressed.