Photo/Illutration Nidec Corp.’s headquarters in Kyoto (Asahi Shimbun file photo)

Precision motors giant Nidec Corp. is facing a potential 250 billion yen ($1.6 billion) loss after a third-party investigation uncovered widespread accounting fraud across the group, which it blamed on a culture of intense pressure created by the company founder.

The report, released March 3, attributed the misconduct to Shigenobu Nagamori's demands for employees to meet unrealistic performance targets.

While the committee found no evidence that Nagamori directly ordered the fraud, it concluded he was aware of and had condoned some of the practices, stating bluntly: "It must be said that Nagamori is the one who should bear the most blame."

IMMEDIATE FALLOUT

The fallout from the report was immediate. Nidec announced that Chairman Hiroshi Kobe and three other executives resigned from their positions effective the same day.

President and CEO Mitsuya Kishida will also forgo 100 percent of his monthly salary until this autumn.

The scandal puts the company's stock market listing in jeopardy. The Japan Exchange Group Inc. (JPX) designated Nidec a "Security on Alert" in October due to internal control failures.

Nidec must now revise and resubmit an improvement plan submitted in January to JPX. It will also submit a "confirmation document" of improvements in October and undergo a review to determine if it can remain listed.

Headquartered in Kyoto, Nidec is a global powerhouse and the top manufacturer of motors for electric power steering and hard disk drives.

Founded by Nagamori in 1973, it grew into a behemoth with more than 100,000 employees and annual sales of roughly 2.6 trillion yen through a strategy of aggressive acquisitions.

The company changed its name from Nippon Densan Corp. in 2023.

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