Irregular accounting cases at NIDEC's Japanese group companies

analysisAt Nidec Precision Corporation (NPCJ), formerly Nidec Copal Corporation, the company-appointed committee's report of 27 February 2026 records an account going back to 2012. An unnamed former employee who was NPCJ's CFO from October 2012 to December 2014 told it he found 'legacy liabilities' with a profit-and-loss impact of about ¥10 billion, created by avoided impairment, inappropriately capitalised expenses and similar improper accounting, including capitalised empty cardboard boxes kept in a warehouse to which PwC Kyoto was not taken during stocktakes, and that in early December 2012 he reported them to NIDEC management executives, beginning with Shigenobu Nagamori. Documents from the time partly support him: about ¥5.5 billion was disposed of in October 2012 to March 2013 and about ¥3.5 billion was still outstanding at the end of September 2013. He said the headquarters CFO or the executive officer responsible for group companies (he could not recall which) told him that, given the impact on consolidated results, not everything could be disposed of. NIDEC's results announcement for the third quarter of fiscal 2012 revised the full-year forecast downward without mentioning the disposals. This is his account as recorded by the committee, not a court or regulatory finding. ¹

analysisAbout ¥11.5 billion of 'legacy liabilities' arose at NPCJ in fiscal 2016, the committee's interim report found. In January 2017 Mr. A, an employee conducting special audits whom the report does not name, reported to Shigenobu Nagamori, the executive officer responsible for group companies and others that their maximum impact, combined with earlier problem items, was about ¥14.0 billion (his report gives an 'aggregate amount of 14,134 million yen') over 29 items at NPCJ's headquarters and 38 at its overseas subsidiaries. He proposed a disposition 'based on adherence to the business performance plan', with the highest priority on preventing external leaks. His examples included avoided impairment of about ¥2.47 billion on equipment for small motors for 'Company α', unimplemented impairment of about ¥5.8 billion on equipment for 'Projects X and Y', about ¥580 million of revenue under technical support agreements not backed by services and about ¥630 million of labour costs capitalised without substantiation. The amounts are Mr. A's; the committee had no compulsory powers, did not aim to establish individual liability and is not a court or regulator. ¹

analysisThe committee traced how the 'Company α' equipment stayed unimpaired. NPCJ had bought the idle equipment for small motors from its Vietnamese subsidiary in August 2016. To avoid a large impairment, the general manager of NIDEC headquarters' Accounting Department repeatedly asked the person in charge at the subsidiary selling those motors to prepare simulations using 'aggressive' production volumes and instructed that they be provided to NPCJ and submitted to PwC Kyoto. NPCJ recognised no impairment on the equipment, whose book value was about ¥2.47 billion in January 2017, and kept depreciating it until depreciation was completed in fiscal 2023 (the year ended 31 March 2024). The general manager is not named; the finding comes from the interim report of a company-appointed committee that relied on voluntary cooperation, did not seek to establish individual liability and is not a court or regulator. ¹

analysisProjects X and Y, in which about ¥6.0 billion had been invested, followed a similar path. After 'Company α' notified NPCJ on 21 October 2016 that it would not be selected as supplier, Shigenobu Nagamori emailed 'Mr. Kobe, the Executive Officer Responsible for Group Companies, and NPCJ officers' the next day that 'a massive impairment awaits us' unless ways of avoiding it could be found. The recipients are quoted as the report lists them; the list does not make clear whether the executive officer is Kobe or a separate recipient, and elsewhere the report treats that officer and Kobe as different persons. NPCJ told PwC Kyoto the equipment would be repurposed for other customers but repurposed only about ¥300 million of it. On 1 December 2018 it reclassified about ¥5.5 billion of the idle assets from construction in progress to fixed assets and began depreciating them over eight years without any impairment, leaving about ¥940 million undepreciated at 31 March 2025. These interim findings of the company-appointed committee, reached without compulsory powers and without the aim of establishing individual liability, are not a court or regulatory decision. ¹

analysisThe committee found no record that the Projects X and Y equipment was repurposed or sold beyond the roughly ¥300 million, and concluded that Shigenobu Nagamori and the executive officer responsible for group companies approved deferring the losses by leaving it idle without impairment. When NPCJ reported the remaining ¥2.45 billion as 'legacy liabilities' in the structural reforms of January–March 2023, the impairment exceeded NPCJ's ¥1.29 billion structural-reform budget, so NIDEC's Group Companies Business Management Department told NPCJ to cover the excess through 'self-funding', and NPCJ was still deferring the losses through depreciation when the committee began work. The committee found no facts indicating that Nagamori instructed or directed the improper accounting it revealed, but concluded that he condoned some of it by accepting its handling 'in a planned manner'. Nagamori said his position was that such assets should be dealt with immediately, but that Mr. A, out of compassion for domestic group companies struggling with their targets, asked him to handle them in a planned manner, 'and I accepted this sometimes'. The conclusion is the committee's, not a court's or regulator's. ¹

analysisThe ¥580 million of revenue in Mr. A's list was 'service revenue' that NPCJ recorded from an outside contractor on Project Y in July–September 2016 without substantiation, the committee found: the contractor had declined a memorandum on a 'development cooperation payment', internal spreadsheets noted that 'in order to reach 580 million, there is no choice but to inflate the headcount', and the committee concluded that no technical support was actually provided. Around early January 2017 the two signed a services outsourcing agreement stating no amount, with a supplemental agreement confirming that no claims or liabilities arose; NPCJ, over its legal department's objection, added the ¥580 million to a schedule and gave PwC Kyoto only the outsourcing agreement. About ¥90 million of the related assets remained undepreciated at the end of fiscal 2024. The committee had no compulsory powers and did not aim at individual liability; its interim finding is not a court or regulatory decision. ¹

analysisNPCJ also moved labour expenses of its development and other departments into construction in progress without verifying that the employees had worked on the projects concerned, about ¥630 million by December 2016 and further unsubstantiated amounts as year-end measures afterwards. After PwC Kyoto raised concerns around October 2017, NPCJ stopped the practice from the third quarter of fiscal 2017, but instead of recognising losses it reclassified the roughly ¥1.1 billion accumulated as machinery and equipment in December 2018 and depreciated it; about ¥95 million was still undepreciated at the end of fiscal 2024. This, too, is an interim finding of the company-appointed committee, made without compulsory powers and not aimed at individual liability, and not a court or regulatory decision. ¹

analysisNPCJ also capitalised development labour costs as a year-end measure. From around 2014, on the suggestion of a NIDEC headquarters officer whom the committee does not name, NPCJ boosted profits by recording its development department's labour costs as 'development work in progress', including costs for mass-produced products supported by purchase orders issued after mass production had begun, and sometimes left the amounts unexpensed after the delivery dates had passed. The committee put the cumulative net impact of this treatment from fiscal 2020 to the first quarter of fiscal 2025 at ¥1,812 million. This finding, too, comes from the interim report of a company-appointed committee without compulsory powers that did not seek to establish individual liability, and is not a court or regulatory decision. ¹

analysisThe committee found that from April–June 2023 to July–September 2025 NPCJ ran a 'Mold Capitalization Scheme': it falsely presented fully depreciated, off-book, loaned or purchased molds and other assets as newly made or processed and capitalised the related labour costs as fixed assets, reducing the cost of goods sold. The scheme began under the leadership of the general manager of NPCJ's accounting department and the executive officers responsible for production after NIDEC headquarters raised NPCJ's operating-margin targets from 6.5%–11.5% to 15.0%–20.6% from fiscal 2023. It capitalised ¥11,900 million from fiscal 2023 to the first quarter of fiscal 2025, with a net impact of ¥6,386 million; NPCJ's 'tools, furniture and fixtures' grew from about ¥160 million at the end of fiscal 2022 to about ¥5.6 billion at the end of fiscal 2024. NPCJ's president, the final approver of the capitalisation documents, said he approved them without scrutinising the details and did not understand the scheme, and the committee did not find that he approved with an understanding of it. The officers are unnamed; the committee lacked compulsory powers, did not aim at individual liability, and its interim finding is not a court or regulatory decision. ¹

analysisTo keep the scheme from being discovered, the committee found, NPCJ gathered the molds concerned, some acquired in the 1990s and rusted, in a 'sealed' room at the back of Building No. 3 at its Koriyama site and decided that neither PwC Japan nor NIDEC's Corporate Administration & Internal Audit Department would be guided there. PwC Japan's planned attendance at the March 2024 stocktake was moved to a later date and a different format after a Shinkansen service interruption. During the internal audit department's on-site inspection in May 2024, NPCJ accounting staff guided the inspectors along a route avoiding the room and presented documents prepared in advance, including falsified man-hour records for work that had not been performed. The staff are not named; the account is an interim finding of a company-appointed committee that lacked compulsory powers and did not aim at individual liability, not a court or regulatory decision. ¹

analysisAt Nidec Drive Technology Corporation (NDTC), the committee's interim report found that from October–December 2019, on its then CFO's instructions and to meet the operating profit in its business plan, NDTC failed to amortise, or understated the amortisation of, cost variances allocated to inventory. Without justifiable reason it extended the amortisation period from six to 12 months from the third quarter of fiscal 2021 and to 24 months from the first quarter of fiscal 2025, the latter ordered by the current CFO around June 2025 after reporting to the current CEO. The unamortised balance reached ¥1,902 million in the third quarter of fiscal 2021; ¥1,105 million remained in inventory in the first quarter of fiscal 2025. The then CFO and accounting staff knew this was improper but used it to avoid near-daily harsh criticism from the executive officer responsible for group companies for missing targets. The then executive general manager of the Finance & Planning Division, now NDTC's CEO, said he did not recall receiving reports on the adjustments; citing the then CFO's and staff's consistent statements that they had reported to him, the committee concluded that he was informed. All are unnamed; the committee had no compulsory powers, did not aim at individual liability and is not a court or regulator. ^{1 2}

analysisA second NDTC problem had surfaced before the committee was formed. On 24 May 2024 NIDEC attributed an overstatement of NDTC sales to a 'misidentification' of consolidation adjustments, amended its securities, quarterly and internal control reports for fiscal 2022 and its quarterly reports for fiscal 2023, and corrected its fiscal 2023 results. Its annual securities report for the year ended 31 March 2025, without naming the subsidiary, treated this as a material weakness in internal control over financial closing and reporting for the years ended March 2023 and March 2024; it judged the weakness remediated during that year, and the related control effective, after reviews of consolidation entries, updated procedures and training, and stronger review of intra-group adjustments. The committee's final report of 17 April 2026 found instead intentional improper accounting to make NDTC's results look better: from around 2019 at the latest, NDTC's then CFO, in charge of these 'Consolidated Adjustments' until fiscal 2023, brought press machines already sold by Nidec Minster Corporation (US) to its customers, and machines sold by Nidec Arisa, S.L.U. (Spain) to customers other than Minster, into percentage-of-completion adjustments, so that the sales were recorded twice in the consolidated accounts. The CFO is unnamed; this is not a court or regulatory decision. ^{2 3}

analysisThe final report also describes how the 2024 review came to treat the double counting as a mistake. PwC Japan found during the fiscal 2023 year-end audit, shortly before the planned date of its Companies Act audit report (14 May 2024), that transactions outside the scope of the Consolidated Adjustments had been included and sales recorded twice. When NIDEC's Corporate Administration & Internal Audit Department investigated, NDTC's then CFO kept the improper adjustments secret and falsely explained them as mistaken inclusions; finding no evidence otherwise in the emails it checked, the department reported a mistake to PwC Japan. The committee's table shows the improper adjustments adding, for example, about ¥5.5 billion to NDTC Group net sales and about ¥5.5 billion to its operating profit for fiscal 2022. The committee found no points requiring revision in the amounts already corrected on 24 May 2024. The CFO is not named, and these committee findings are not court or regulatory decisions. ^{2 1}

analysisMachine-tool maker Nidec OKK Corporation (NOKJ), which joined the group in 2022 and became wholly owned in 2023, produced ahead of orders under a 'standby strategy'. The committee's interim report found that NOKJ, its manufacturing subsidiary Nidec Ohtoyo Kiko Corporation (NOTK) and its US sales subsidiary Nidec OKK USA Corporation (NOKA) did not write down 'Bad Inventory' with no asset value (stock that had not moved for three years or more, materials for obsolete models and stock beyond projected production), treating it as having value and so avoiding the expense. The write-downs that should have been recognised totalled ¥2,437 million at the end of June 2025: ¥1,742 million at NOKJ, ¥39 million at NOTK and ¥656 million at NOKA. The company-appointed committee relied on voluntary cooperation and did not aim to establish individual liability; its finding is not a court or regulatory decision. ¹

analysisNOKJ had reported the Bad Inventory to NIDEC headquarters as 'legacy liabilities' in the structural reforms of January–March 2023, the committee found, but the headquarters CFO and Accounting Department classified it as a Planned Disposition Liability to be handled through 'self-funding', that is, disposed of while still meeting targets, so no write-down was made and disposal made no progress from fiscal 2023. In March 2025, after NOKJ's CFO proposed including the disposal (several billion yen) as structural-reform expenses in the fiscal 2025 plan, the executive officer responsible for group companies instructed that it not be included if there was no prospect of meeting NOKJ's targets; ¥2,437 million remained without write-downs at the end of June 2025. The executive officer, whom the report does not name, told the committee that while he may have instructed that the disposal be self-funded, the instruction was premised on proper accounting and was not an instruction to exclude from the business plan inventory that should have been written down. The CFOs are also unnamed; the findings, made without compulsory powers and not aimed at individual liability, are not a court or regulatory decision. ¹

analysisNidec Instruments Corporation (NIST) recorded no impairment loss on company housing built in 1968, although the last residents left in 2020, no future use was planned and the building needed prompt demolition; offers were in the ¥100 million range for the land alone, against a book value of about ¥500 million for land and building. NIST reported the housing as a 'legacy liability' with an operating-profit impact of about ¥420 million in the structural reforms of the fourth quarter of fiscal 2022 (January–March 2023), but it was excluded from them so that the full-year operating profit of ¥100 billion or more targeted in those reforms for fiscal 2022 would be reached, and left to 'self-funding'. NIST's chairman, CEO and CFO, whom the committee does not name, did not pursue an impairment review for fear of missing operating-profit targets. After deciding in March 2025 to sell the land to the local government, NIST recorded a ¥414 million impairment loss in January–March 2025, which the committee found should have been recorded in January–March 2021. The committee had no compulsory powers and did not aim at individual liability; this is not a court or regulatory decision. ¹

analysisThe committee found that NIDEC arbitrarily excluded land owned by Taiwan Takizawa Technology, a subsidiary of Takisawa (NTKS), from the purchase-price allocation for NTKS, and so avoided recognising a bargain-purchase gain of ¥3.34 billion. At a meeting on 20 September 2024 the headquarters CFO was told that including the land would, through retroactive adjustment, make operating profit for fiscal 2023 (the year ended 31 March 2024) a record. The land was then excluded, the outside advisor was told to value only movable assets, and the Accounting Department did not inform PwC Japan of the appraisal gain or of the exclusion. The CFO told the committee he felt uneasy about a retroactive record profit for fiscal 2023 and had hoped to avoid it, but believed that choosing the option presented by the department's experts would not violate accounting rules. The headquarters staff concerned are not named, and the finding is not a court or regulatory decision. ¹

analysisNIDEC had acquired 86.14% of Takisawa Machine Tool Co., Ltd. by tender offer in November 2023 and made it wholly owned through a stock consolidation in February 2024; the avoided gain would have been recognised in NIDEC's consolidated statements for fiscal 2023. According to the committee's interim report, Accounting Department staff had seen in June 2024 that the Taiwanese subsidiary's land could produce an appraisal gain of about ¥9.3 billion (about ¥8.75 billion in later figures), requiring retroactive adjustments. They told the committee they wanted to avoid a retroactive adjustment that would raise the bar for the record profit targeted in fiscal 2024 and reduce profits on any future sale. Besides his unease about a record fiscal 2023 profit and his belief that the option the accounting staff presented did not violate accounting rules, the CFO said he was not well versed in the IFRS rules on purchase-price allocation. The committee, which had no compulsory powers and did not aim to establish individual liability, does not name the CFO or the staff; its findings are not a court or regulatory decision. ¹