Nidec: earlier warnings, incomplete reforms and missing information

analysisThe 2019 outside-law-firm investigation described in the committee report identified eleven problematic accounting instances in the US businesses of ACIM and AMEC and at headquarters. They included US$17 million of inventory and doubtful-account reserve reversals, US$4.2 million of bonus-reserve reversals, US$14 million of litigation and warranty reserve reversals, and US$4.3 million of prematurely recognised tariff-related sales. Other items were stated as possible misconduct, and local managers refused some requests. An initial internal review had characterised one adjustment as error; a participant later told the committee there had been a desire to avoid a finding that would delay closing. The committee said the outside inquiry’s scope was discussed with Nidec and was not completely independent. The earlier inquiry mentioned suspected involvement by then-president Yoshimoto. He later acknowledged instructing reserve reversals but said he understood them as permissible aggressive accounting and did not recognise the expense deferrals as improper. The committee found no objective evidence disproving that account. The 2026 committee’s later, broader assessment found no facts showing that Yoshimoto instructed, directed or condoned the misconduct it uncovered; that differentiated conclusion is retained. ¹

analysisThe committee describes a parallel special-audit system run by an anonymous employee, “Mr. A”, under Nagamori’s direction. Nagamori told investigators he wanted misconduct corrected without public escalation and feared that normal internal-audit channels would pass the information to PwC Kyoto. The committee was unable to interview Mr. A because he did not respond. The anonymous role is not assigned to a person from later officer lists. Nagamori’s explanation included giving remorseful employees a second chance; his July 2018 email also called for an immediate audit of reported manipulative accounting. ¹

analysisThe report also records that selected warnings did reach PwC Kyoto during the 2019 inquiry. Shared emails included a December 2018 asset-revitalisation update identifying ¥13.72 billion of additional problematic assets, and a Copal special-audit report describing approximately ¥11.35 billion at March 2018 and a planned amortisation process intended to avoid external leaks. These historical internal schedules are not additional final group losses. Evidence that selected documents were shared does not show that the auditor had every relevant record or establish its legal liability; the 2026 committee did not review the audit working papers. ¹

analysisAfter the 2019 inquiry Nidec issued accounting notices and Nagamori circulated a message prioritising legitimate accounting even when targets were missed. The committee nevertheless found that specific recommendations to moderate target pressure were not implemented. A proposed subsidiary CFO reporting structure also failed to materialise; the responsible former officer cited insufficient personnel. The existence of formal policies and the committee’s criticism of implementation are both material. Later repeated misconduct is not treated as proof that every employee ignored the policies. ¹

analysisThe committee said internal audit and legal/compliance avoided confronting headquarters’ performance pressure. Some full-time oversight members understood the underlying problem but did not raise it with the board. Outside oversight members received superficial accounts and said they did not understand the accumulated “legacy liabilities” or the real purpose of the structural reforms. These are findings about information flows and oversight functions. The anonymous criticisms are not assigned to individual directors merely because their office dates overlap. The report also recognised the internal-audit staff’s expertise and depth of document review. ¹

analysisThe committee describes Nidec’s plan to give the audit-and-supervisory committee regular internal-audit reports and prior approval over the internal-audit head’s appointment or transfer, while increasing accounting-audit staff from twelve to around twenty to thirty. The report regarded the company’s diagnosis as broadly consistent with its own and acknowledged the depth of some prior investigations. These planned changes are not evidence that the later audit-evidence and control problems had already been resolved. ¹