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In Japan, arrest at Toyota supplier for China bribes

A senior executive from a major parts supplier of Toyota has been arrested in Japan for violating that country’s Unfair Competition Prevention Law.

Takehisa Terada, former senior managing director with Futaba Industrial Co. and legal representative to Futaba’s Chinese subsidiary, Guangzhou Futaba Auto Parts Co., Ltd, allegedly gave $4,500 and a ladies handbag worth $1,500 to a government official to halt an investigation into irregularities at a company plant in China.

In return for the bribe, Futaba allegedly received a lenient fine rather than a work suspension order.

Toyota Motor is the largest shareholder in Futaba Industrial with a 12.25% stake.

Futaba’s former executive Terada is also accused of offering four other China customs officials in charge of overseeing Japanese firms 16 bribes amounting 50 million Yuan ($505,500).

Terada has reportedly confessed to the crimes. According to a statement published in the Japan Times, he admitted passing “on tens of millions of yen in bribes to Chinese government officials on a total of 16 occasions from around 2002.”

According to Securities Daily, Futaba Industrial was unaware of Terada’s alleged bribery. An official from Toyota Motor’s China office claimed that Toyota funded Futaba but didn’t participate in its operations.

Japan’s unfair competition law was amended in 1998 to include provisions making it illegal to bribe foreign government officials. This is only the fourth time charges have been brought under the new provisions.

Sources: Japan Times, Securities Daily (证券日报), Want China Times


Hui Zhi is a Senior China Analyst with the China Compliance DigestA version of this post appeared in the China Compliance Digest.

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