Nidec Founder Suppressed Internal Accounting Investigation Request in 2017
nashnova research
Nidec founder Nagamori Shigenobu blocked an internal request in 2017 to investigate ¥22 billion in suspect assets — a decision that snowballed into Japan's biggest accounting scandal in a decade, with the stock now at a ten-year low and delisting risk on the table.
What exactly did the founder suppress?
In 2017, a Nidec executive proposed hiring outside lawyers and accountants to probe roughly ¥22 billion (about $139 million) in potentially impaired assets. Nagamori rejected the request outright.
He went further: the suspect amount had to be cut in half before the board could even be told. This means → the board and auditors were kept in the dark while the numbers were managed down.
A 250-page independent investigation report found Nagamori "failed to report suspected accounting fraud" and concluded he and eight other former executives bear civil liability.
Where did the accounting rot start?
The report traces the root cause to Nagamori's management method: set a profit target first, then work backward to decide how much asset impairment is acceptable.
In plain terms = instead of writing down assets to reflect reality, the company wrote them down only as far as the profit goal would allow — the numbers served the target, not the facts.
This reflects a systemic governance failure: founder power was too concentrated, internal checks existed on paper only, and accounting judgment was overridden by business ambition.
How dire is Nidec's situation now?
Nagamori stepped down as honorary chairman in February but remains the company's second-largest shareholder.
Last month, PwC Japan refused to issue an audit opinion on Nidec's accounts, even after the company booked ¥632 billion in fresh impairment charges. This means → the auditor could not confirm the books are reliable — an extraordinarily rare refusal.
Nidec's stock has fallen to a near-ten-year low, valuing the company at roughly ¥2.1 trillion. It must now prove to the Tokyo Stock Exchange that internal controls have improved sufficiently — or face delisting.
Can an activist investor change the picture?
Activist fund Oasis Management disclosed last week that it holds 9% of Nidec, surpassing Nagamori to become the largest shareholder, and is pushing for a take-private deal.
Analysts warn, however, that the deepening legal disputes around Nidec may create significant uncertainty for any potential buyer trying to size up the liabilities.
In plain terms = no buyer knows how deep the hole really goes, which makes any privatization negotiation slower and more complicated.
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