In April 2006, immediately after the establishment of the former INPEX Holdings Inc., we formed the Compliance Committee, which is tasked with reviewing the Group’s basic policy and issues concerning compliance, as well as monitoring and managing the implementation of compliance practices, so as to ensure consistency in compliance throughout the Group.

The Committee also works with statutory auditors, the Board of Statutory Auditors, independent auditors and the Internal Audit Unit to: (1) develop and implement compliance programs; (2) monitor their implementation; (3) raise employees’ awareness of compliance policy and procedures; (4) receive reports on and investigate cases of noncompliance; (5) issue warnings and take measures to end any noncompliant conduct; and (6) establish measures to prevent recurrence of noncompliant conduct.

The former INPEX CORPORATION and Teikoku Oil both had compiled compliance manuals on important matters that needed to be addressed, such as the handling of company information and assets, fair trade practices, safe and secure workplace environment that values occupational safety and a high work ethic; and made the manuals available to all officers and employees.

Upon the merger of the two companies in October 2008, we released a new compliance manual that incorporates the best features of the manuals of both companies. This is intended to ensure that all employees understand that compliance is indispensable to securing the long-term continuity of the company and is at the foundation of our business activities. Our employees are also expected to renew their commitment to follow compliance practices.

The new compliance manual discusses the Group’s Mission, Corporate Social Responsibility Policy, an overview of the Compliance Committee, the Code of Conduct, and examples of compliance practices. A separate compliance FAQ document provides a number of case studies.

We have distributed copies of this manual to all of our officers and employees, and post revisions on a company bulletin board to keep them updated.

In fiscal 2008, the former INPEX CORPORATION had compliance seminars to brief employees on the result of questionnaire surveys conducted in 2007.  The former Teikoku Oil Co., Ltd. conducted questionnaire surveys on compliance among their officers and employees, including those in their subsidiaries and affiliated companies in fiscal 2008. Based on the results of the surveys, we ascertained our employees’ awareness level of compliance, and identified issues and challenges associated with raising their awareness. In addition, these findings were shared by management of the entire Group and employees were briefed on them through compliance seminars.

In an effort to foster greater awareness of compliance throughout the Group, the Compliance Committee has formulated the following action items for fiscal 2009:

• Conduct another questionnaire survey to gauge employees’ awareness level of compliance throughout the Group, a year after the new fully-integrated INPEX CORPORATION became operational. Use the survey results to develop and implement a training program that concentrates on illustrative case studies on compliance for better understanding.
• Offer more content in the compliance section on the internal information-sharing network.
• Educate new employees on compliance.
• Enhance the monitoring of compliance policies and practices implemented by Group companies.

We established the Help-Line System for our officers and employees in April 2006, when the Whistle-blowers Protection Act became effective.

We have also devised our Help-Line Procedures to implement a fraud-reporting protocol that includes mandatory reporting of fraud or unethical conduct, fact-finding procedures, protection of whistle-blowers, and confidentiality of reporting. Fraud reports are submitted to a department in charge of compliance (the General Administration Unit) or an external expert designated by the Compliance Committee. When the latter receives a fraud report, it is shared with the former in a timely manner. Our officers and employees can report unethical behavior anonymously and are rigorously protected against retaliatory action for filing such reports.

In April 2008, a PC owned by one of our employees became infected with a virus and data on it was disclosed over the Internet through the file-sharing software "Share." Most of the information was from internal memos and no confidential information was disclosed. However, as a few documents related to our subcontractors were among the disclosed information, we told the concerned parties what had happened, and took urgent measures to prevent the spread of the disclosed information. After this incident occurred, we reemphasized the importance of protecting the integrity of information assets throughout the Group and implemented a stricter procedure on allowing employees to take business information outside the company to prevent a recurrence of accidental information disclosure.