Photo/Illutration A Bigmotor Co. used car lot (Yuki Kubota)

Hiroyuki Kaneshige, the president and founder of leading used car dealer and workshop chain Bigmotor Co., announced his resignation July 25 to take responsibility for his company’s involvement in a shocking auto insurance scam.

It follows revelations that employees routinely damaged automobiles sent in for accident repairs and passed the inflated costs to insurance companies.

The full extent of this grave corporate wrongdoing has yet to be uncovered. But it must be brought to light without delay so the victims can be duly compensated.

Kaneshige told reporters July 25 he had no personal knowledge of the scam.

However, he said, “I am taking this most seriously because of my responsibility as the president.”

A report compiled by the company’s special investigative committee said workers would whack vehicles with a golf ball in a sock, scratch them with a screwdriver or intentionally break headlight covers to inflate insurance bills. 

We were left speechless by this report. Vehicles were intentionally damaged for the sole purpose of inflating repair bills. The report called them “extremely malicious acts that could amount to criminal destruction of property.”

We also understand that many of the ensuing repair and paint jobs were unnecessary. Nearly 1,300 cases have been uncovered so far at the company’s 30 paint and bodywork shops.

The report pointed out that the root of the problem was the policy of Bigmotor management in forcing workshops to attain an unrealistically high profit margin. It went on to state that the head of a workshop that failed to reach the goal could expect to face intense questioning during a subsequent meeting.

At his news conference, Kaneshige denied these practices were “systemic.” But some of the company’s top executives, including his son who is the vice president, are known to have not only issued arbitrary demotion orders right and left to “underperforming” workshop chiefs, but also ignored all inhouse whistleblower reports and refused to conduct any investigation.

There is no question that the greatest responsibility lay with the company’s top management.

Moreover, since the company never held a directors’ meeting even though this is compulsory under the Companies Act, there are no minutes of any discussions,, either.

Even with its 260 outlets around the nation, 6,000 employees and annual sales in excess of 500 billion yen ($3.55 billion), Bigmotor is in no shape or form--literally--to qualify as a legitimate corporation.

Considering the gravity of its malpractice, we must say its survival as a business entity is entirely up to consumers to decide.

The victims of Bigmotor’s wrongdoing are auto insurance policyholders whose insurance grading went up because of the unnecessary repairs and got stuck with paying higher premiums.

Bigmotor, as well as all the insurance companies concerned, must give those customers priority treatment in righting the wrong.

Japan’s top three nonlife insurance companies, including Sompo Holdings, Inc., recommended Bigmotor’s repair workshops to their policyholders who got into accidents. Reportedly, these insurance companies seconded their own employees to Bigmotor to assist the latter’s insurance agency business.

Could this sort of “customer sharing” structure have helped expand the scale of the scam? A thorough investigation is in order.

The Ministry of Land, Infrastructure, Transport and Tourism intends to interview the parties involved in view of the possible violation of the Road Transport Vehicle Law.

The Financial Services Agency, which oversees the Insurance Business Law, is also planning to mount an investigation.

This whole sorry business threatens to affect the credibility of the auto repair and insurance businesses in the eyes of the public. We hope the investigations will be conducted strictly and efficiently.

--The Asahi Shimbun, July 26

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