Nidec Suspected of Product Quality Fraud

Tokyo, 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. More than 1,000 such improper cases are believed to have taken place, 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. Quality irregularities came to light as a result of an internal inspection conducted in the wake of an 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. At a press conference in Tokyo, Nidec President and CEO Mitsuya Kishida apologized for the quality issue. “Product quality is the foundation of manufacturing,” Kishida said. “We take it extremely seriously.” According to the company, the quality irregularities were committed mainly at departments related to home appliances, and in-vehicle and information technology products from 2020 to 2025, 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. Kishida said that the irregularities included changing materials to reduce costs. Nidec said that it has started 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 noted that the company’s founder, Shigenobu Nagamori, had put strong pressure on its staff to meet performance targets. Kishida admitted that the accounting scandal and the product quality issue may have the same root cause. “We want the investigation committee to reach an answer,” he said. 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 within a year. At its regular general meeting of shareholders scheduled for June 18, Nidec plans to seek approval for a plan to appoint 10 of its 13 board members from outside the company. Nidec will also propose cutting its number of group companies to improve governance. Business performances will be reported at an extraordinary shareholder meeting to be held at a different date, as the company is taking time for procedures related to book closing due to the accounting fraud. END [Copyright The Jiji Press, Ltd.]