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Nidec Faces $1.6B Write-Down in Accounting Scandal
4 Mar
Summary
- Nidec warns of a potential 250 billion yen write-down.
- Founder's excessive pressure allegedly led to creative accounting.
- Top executives, including the founder, have resigned amid the crisis.
Japanese electric motor manufacturer Nidec has issued a warning regarding potential write-downs totaling 250 billion yen, approximately $1.6 billion, stemming from a significant accounting scandal. This crisis has led to the departure of its founder and several other top executives.
The company, a major global supplier of precision motors to automakers, has been grappling with this issue since June when irregularities were first suspected at an Italian subsidiary, delaying financial report filings. An independent investigation was launched in September to probe potential management involvement in improper accounting at both Italian and Chinese subsidiaries.
A report released on Tuesday indicated that founder Shigenobu Nagamori exerted "excessive pressure to meet performance targets," which encouraged many business units to employ creative accounting methods. While Nagamori has resigned as chairman emeritus and apologized for suspected inappropriate practices, a separate investigation will determine legal responsibility.
This scandal represents a significant downfall for Nagamori, a celebrated figure known for his business philosophy. Nidec's shares have fallen, and the company faces potential delisting from the Tokyo Stock Exchange. Chairman Hiroshi Kobe and three other senior executives have also resigned.
