Nidec Suspected of Product Quality Fraud

Kyoto, May 13 (Jiji Press)–Major Japanese motor maker Nidec Corp. said Wednesday that improper activities, such as changing materials, manufacturing processes and designs without customer approval, are suspected for some of the firm’s products. There are believed to be more than 1,000 such improper cases, according to sources familiar with the matter. The company, based in the western city of Kyoto, set up an investigation committee composed of outside experts the same day. The committee is expected to complete its investigation by the end of August. The quality irregularities came to light as a result of an internal inspection conducted in the wake of the accounting fraud discovered at the company last September. “No issues have been identified that would immediately affect product functionality or safety,” Nidec said in a statement released Wednesday. Still, it is likely to take more time before the company can regain trust following the discovery of the additional misconduct. According to the company, the quality irregularities were committed mainly in departments related to home appliances, and in-vehicle and information technology products, and most of them involved changes in materials and manufacturing processes made without customer approval. In addition, improper handling of testing and inspection data as well as inappropriate indication of places of production have been discovered. Nidec said that it has begun contacting and providing explanations to customers. Over the accounting irregularities, an investigation committee made up of outside experts including lawyers compiled last month a final report saying that the company had inflated its net profit by a total of 160.7 billion yen. As a major factor behind the irregularities, the report pointed out that the company’s founder, Shigenobu Nagamori, had put strong pressure on its staff to meet performance targets. On Oct. 28 last year, the Tokyo Stock Exchange designated Nidec, listed on its top-tier Prime section, as an issue on “special alert.” The company could be delisted unless it improves its internal control system in a year’s time. At its regular general meeting of shareholders scheduled for June 18, Nidec plans to seek approval for board of director candidates including more external members. Business performances will be reported at an extraordinary shareholder meeting to be held at a different date, as the company is taking time on procedures related to book closing due to the accounting fraud. END [Copyright The Jiji Press, Ltd.]