Prudential Life Sets Up 3rd-Party Panel to Investigate Fraud

Tokyo, Feb. 10 (Jiji Press)–Prudential Life Insurance Co. said Tuesday that it has set up a third-party committee to investigate widespread fraud in which its employees scammed clients out of some 3.1 billion yen. “We’ve found it necessary to undergo a third-party investigation with higher expertise and objectivity,” Hiromitsu Tokumaru, who became the company’s president on Feb. 1, said at a press conference in Tokyo. The president also revealed that there were about 300 compensation claims from customers as of Monday, following the company’s announcement of its compensation policy. Shuji Iwamura, former head of the Nagoya High Public Prosecutors Office, became head of the third-party committee. It will verify the results of the in-house investigation, analyze the causes and propose measures to prevent a recurrence. Until now, the company had been negative about the establishment of a third-party committee, but changed its policy. The third-party panel will also examine whether the management’s series of responses to the fraud were appropriate. “Based on the committee’s findings, we will take appropriate action, including measures concerning management, if we determine they are necessary,” Tokumaru said. Since 1991, more than 100 current and former Prudential Life employees have fraudulently received a total of 3.1 billion yen from some 500 customers by encouraging them to invest in unauthorized financial products. Among customer compensation applications, dozens of additional cases involving suspected employee misconduct have been identified, in addition to those already announced. The Financial Services Agency is working to determine the full scope of the misconduct, including through on-site inspections, while considering administrative punishment. At a separate press conference on Tuesday, Finance Minister Satsuki Katayama said that she will instruct the agency to strictly examine the company’s ability to implement effective preventive measures. Regarding compensation for fraud victims, Prudential Life initially planned to set up an expert panel to determine the scope of compensation, but it now plans to fully compensate victims of fraud conducted by employees while in service. For cases involving former employees, the panel will decide whether to pay compensation. Prudential Life has suspended sales of new insurance policies for 90 days from Monday to rebuild its governance system and strengthen employee management and training programs. The company has also halted recruitment of new sales representatives. “If we are not confident that sufficient measures have been taken, we will consider extending the service suspension period,” Tokumaru said. END [Copyright The Jiji Press, Ltd.]