Compliance

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Compliance Consultation and Reporting System

The purpose of the Group’s consultation and reporting system (hotline), dubbed “Welcome to All about Compliance,” is to quickly detect and prevent any illegal activities or unethical conduct, whether actual or suspected, using a framework that properly processes reports and consultations regarding unethical conduct and illegal activities by individuals or organizations.

This hotline is operated jointly by Chiyoda and its nine Group companies. It has an External Consultation Center with a lawyer available to everyone in the workplace and staff who specialize in women’s workplace issues. In the fiscal years ended March 2010 and 2011, the system received reports as follows. As feedback, Chiyoda reported the measures it took in each case.

Breakdown of Reports	FY Ended March 2010	FY Ended March 2011
Work environment improvements	3	4
Compliance with office rules	3	4
Requests for attention	0	0
Other	2	1
Total	8	9

Compliance Education, Awareness and Tools

Strengthening and Expanding Cooperation between Field Offices and Group Companies

Pre-assingment training for site manager

Chiyoda regularly monitors the status of compliance at overseas Group companies and makes onsite visits each year to interview the responsible person at each company and those who handle compliance at the practical level. In addition, individual pre-assignment training is provided to site managers, who have overall responsibility for field offices (construction sites), to shore up risk response at the front lines of our business. Moreover, Chiyoda has expanded feedback on issues and customer trends to the entire Group.

Intensive Compliance Campaign Month

Lawyer leading a workshop on foreign corrupt
practices prevention for overseas project staff

In October 2008, we designated October every year as Intensive Compliance Campaign Month. During this month, we conduct compliance education through e-learning and seminars by outside professional instructors covering laws related to the Chiyoda Group’s operations. In addition to Intensive Compliance Campaign Month, seminars by outside professional instructors and lawyers were conducted in the fiscal year ended March 2011. Seminar topics and numbers of participants from related departments are shown below.

Topic	Participants
Executive officer compliance training	28
Unfair Competition Prevention Act (to prevent bribes to foreign civil servants )	37
Construction Industry Law	54

Notes:
In recent years we have been strengthening compliance with particular emphasis on the following laws and actions.
Anti-Monopoly Law:	The Anti-Monopoly Law basically prohibits unreasonable restraints on trade, private monopolization and unfair methods of competition, and is intended to ensure free and fair trade among companies and businesses.
Subcontract Act:	A special act within the Anti-Monopoly Law, officially called the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors. It proscribes obligations and restrictions related to payment by contractors in order to protect the interests of subcontractors.
Unfair Competition Prevention Act:	A law regulating unfair behavior in order to ensure fair competition among business entities and a fair market. A revision in 1999 prohibits bribes to foreign civil servants. In recent years, the United States, U.K. and other countries have also bolstered prohibition of corrupt practices such as bribery, and extraterritorial application.
Insider trading:	A representative example of unfair trading, in which individuals related to a company obtain significant information that could affect that company’s stock price, and then buy or sell that stock before the information is made public.

Hierarchical Training

Chiyoda provides training to new employees and mid-career hires when they join the Company, a self-check of compliance awareness for all line managers with an e-learning program, and special training by lawyers for newly appointed directors and executive officers.

Professional Training

We conduct regular professional training by outside professional instructors and provide cautionary reminders with teaching materials for employees in Group businesses within the scope of the Construction Industry Law, the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors, the Unfair Competition Prevention Act (to prevent bribes to foreign civil servants), and the Anti-Monopoly Law (to prevent bid rigging). We also provide information regarding revision of regulations and other developments, and maintain alertness through cautionary reminders.

e-Learning

To promote thorough awareness of the CSR Visions, the Chiyoda Group Code of Conduct and the Compliance Consultation and Reporting System, we have been providing e-learning for all the members working in the Chiyoda Group since the distribution of our CSR Handbook.

Compliance Tools

CSR Handbook

Chiyoda published the CSR Handbook, which is a compilation of the Chiyoda Group Corporate Philosophy, CSR Visions and Code of Conduct, and distributed it to all Japanese employees. We also published and distributed an English edition for non-Japanese employees.

Chiyoda Compliance e-Book

We have posted a compliance e-book on the Company intranet. It contains explanations and important points relating to the main laws concerning Company operations, such as the Construction Industry Law and the Anti-Monopoly Law.

Compliance Quiz

Compliance quizzes on everyday events and current topics related to compliance at the office and at home are given over the Company intranet in the form of a two-person dialogue. Using this game format encourages Chiyoda officers and employees to increase compliance awareness on their own.

Audits

As part of our mechanism for ensuring compliance, we have also implemented internal auditing regarding the Construction Industry Law, the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors, Unfair Competition Act (to prevent bribes to foreign civil servants), and the Anti-Monopoly Law (to prevent bid rigging), etc.

Compliance Consciousness Survey

We conducted a survey to measure compliance consciousness, including awareness of compliance activities carried out by the Chiyoda Group. The response rate of 3,500 Group employees was 65 percent.

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Responses to major items on the survey for all the members working in the Chiyoda Group were as follows.

(1)Awareness of the Code of Conduct of the Chiyoda Group: 80% (68%)

(2)Awareness of the Chiyoda Group Compliance Manual: 64% (42%)

(3)Awareness of the Compliance Consultation and Reporting System: 84% (67%)

(4)Awareness of other points relating to the Compliance Consultation and Reporting System:

No unfavorable treatment guaranteed to persons who report unethical act or conduct under the System: 79% (60%)
The existence of staff who specialize in women’s workplace issues: 61% (13%)
The availability of a lawyer as a contact outside the Company for the reporting: 53% (26%)
(Figures in parentheses show previous survey results.)

We will reflect the survey results in conducting higher quality activities while raising awareness within the Group.

Location

Scope of Work

Year of Completion