Nidec founder and 8 executives found liable for 27.6 billion yen accounting fraud damages

Japan's Nidec, a global motor manufacturer headquartered in Kyoto, on October 20 published a report from its executive liability investigation committee finding that founder Shigenobu Nagamori and eight other former executives bear legal responsibility for accounting irregularities across the group.

The investigation committee, comprising external lawyers and other independent experts, concluded that the company systematically prioritized revenue targets above accounting principles. According to the report, management set profit goals first, then worked backward to determine which asset impairments could be recognized. This reversed the proper order of accounting, allowing losses to be deferred. The committee found that Nagamori and fellow founder Hiroshi Komobe established this flawed approach; Chief Financial Officer Akira Sato and a former executive officer then implemented it; and five successive company presidents—Hiroyuki Yoshimoto, Jun Seki, Mitsuharu Kishida, Kazuya Murakami, and Hiroyuki Ochiai—failed to correct it over many years.

The committee calculated total damages at 27.6 billion yen, comprising investigation costs of approximately 22.2 billion yen and audit costs of approximately 5.3 billion yen. The nine named individuals are Nagamori, Komobe, Sato, Yoshimoto, Seki (who now serves as chief strategy officer for electric vehicles at Taiwan-based Hon Hai Precision Industry), Kishida (former president), Murakami, Ochiai, and one former executive officer. The report stated that while the committee could not determine individual contributions to fraud-related damages, each defendant bears liability under Japan's Companies Act. The committee recommended that courts ultimately assess specific damages and contributions.

Nidec's accounting irregularities—including inflated revenue and deferred loss recognition—prompted the establishment of the executive liability investigation committee. The company has already indicated it will pursue legal action against the nine defendants. Nidec remains under Tokyo Stock Exchange supervision as a "special attention stock" and faces a listing review following submission of an improvement confirmation report by the end of October.