NIDEC quality misconduct, customs duties and trade investigations

analysisAccording to NIDEC's notice of 4 September 2026, NIDEC began a quality review of the group's production and development sites on 8 January 2026 as part of the internal-control improvements of the Nidec Corporate Reform Committee, which had been set up on 30 October 2025. After suspected misconduct emerged at several sites, NIDEC set up an investigation committee of outside experts on 13 May 2026. It received the committee's report on 2 September 2026 and published it on 4 September 2026. ^{1 2}

analysisOn 13 May 2026, the day the committee was set up, NIDEC announced that it had identified more than 1,000 suspected cases of misconduct. According to a press report of 5 August 2026, NIDEC's president apologised at the press conference at which the suspected quality misconduct was announced, saying that the company would thoroughly identify the problems and rebuild itself as a trusted company. The committee's report explains that the figure of more than 1,000 was NIDEC's own tally of information on suspected misconduct gathered in the quality review: it had not gone through the committee's selection of cases and fact-finding and cannot simply be compared with the committee's count of 844 cases. ^{2 3 1}

analysisThe committee consisted of three outside experts affiliated with law offices: Toshihiko Itami, its chair and a former Superintending Prosecutor of the Osaka High Public Prosecutors Office; Hideo Makuta, a former Director of the Criminal Affairs Department of the Supreme Public Prosecutors Office; and Kenji Kawai, a former President of the Sendai High Court. Its investigation included a questionnaire sent to all 97,663 officers and employees of 305 production and development sites, which drew 89,973 responses (92.1%), and an interview survey conducted by an AI avatar at 16 sites. ²

analysisThe report sets out the limits of this work. The investigation was voluntary and without legal compulsion, relying on the cooperation of the NIDEC group and those involved; some people declined interviews and answered only by e-mail, and some did not respond and could not be reached. The committee states that it did not exhaustively capture all suspected quality misconduct in the group and that its findings are not guaranteed to match future fact-finding or legal assessment by courts, regulators or other third parties. ²

analysisIn its report of 2 September 2026 the committee identified 844 cases of quality misconduct in 12 business units, 60 classed as important and 784 as ordinary. Nidec Instruments (NIST) had 585 cases, Nidec Mobility (NMOJ) 125 and Nidec Techno Motor (NTMC) 57, together about 90.9% of the total. The committee warned that case counts alone are not an appropriate measure of the quality risk or seriousness of problems in each unit, because the share of important cases differs widely between units. These are findings of outside experts appointed by NIDEC in a voluntary investigation, not a court or regulatory decision. NIDEC's notice of 4 September 2026 apologised for the concern and inconvenience caused to customers, shareholders, investors and others and said all officers and employees would carry out reforms of culture, systems and processes. According to a press report the same day, NIDEC's president told a press conference that the company took the matter extremely seriously and apologised, that no case affecting product safety or past financial results had been confirmed so far, and that internal disciplinary measures were planned. ^{1 2}

analysisBy type of conduct, the committee classed the great majority as so-called '4M' changes, that is, changes to the people, machines, materials or methods used in manufacturing or testing, made without the prior customer notification or approval required: 805 cases, or 95.4%. The committee also counted 22 cases (2.6%) of falsified or fabricated test or inspection results, 11 (1.3%) of breaches of inspection or manufacturing conditions, 4 (0.5%) of use or shipment of out-of-specification or unapproved products and 2 (0.2%) of breaches in preparing or managing records on parts and materials. Among the 60 important cases, 28 involved 4M changes and 22 falsified or fabricated results. The classification is the committee's own, made in a voluntary investigation, and is not a court or regulatory finding. ¹

analysisThe committee stated that its investigation did not confirm that NIDEC's management, including Shigenobu Nagamori, instructed or took part in quality misconduct for the purpose of meeting performance targets. Its forensic review of preserved e-mails and other electronic data of 31 current and former NIDEC officers found no new suspected cases and no e-mails clearly showing that officers had instructed or tolerated specific quality misconduct. The committee, which had no compulsory powers, qualified this: management's performance demands were not the direct cause of all the misconduct, but in at least some units high targets and short-cycle performance management constrained the time, staff and equipment needed for change procedures, inspection, customer response and correction of quality problems. ¹

analysisOn organisational causes, the committee concluded that an 'unhealthy state' allowing the misconduct to arise and persist had formed through management's stance of strongly demanding short-term performance targets and cost reductions without building a management structure commensurate with the group's rapid expansion, together with insufficient assessment and monitoring of quality risks and of transitions in business successions and production transfers, and insufficient quality-assurance resources and independent checks by quality-assurance departments. It found that management had kept a structure centred on micromanagement by Nagamori without ensuring the transparency needed for governance, passing the strain and contradictions of top-down targets on to business units and sites. This is the committee's assessment of causes, made alongside its statement that it did not confirm instruction or participation by management including Nagamori. NIDEC said it takes the findings solemnly and extremely seriously and regards the issues of management stance and culture shared with the causes of its accounting misconduct, such as excessive performance pressure and a culture in which people could not speak up, as fundamental issues to address. ¹

analysisThe report describes several important cases. At a domestic site of Nidec Instruments, torque-strength tests (from around January 2022 at the latest) and pull-out-strength tests (from around May 2024 at the latest) on a crimped component were not carried out for each production lot until around July 2026; fixed values meeting the specification were recorded as measured values, and inspection reports showing the tests as passed were submitted to the customer. The practice originated at a domestic company that Nidec Instruments acquired in 2021 and continued after production was transferred to Nidec Instruments. According to the report, production staff considered lot-by-lot testing unnecessary for quality because crimping under the same conditions gave stable results well above the specification, and the pull-out test, which destroys the tested product, was laborious. The committee found no customer approval for a change in test frequency, and nothing indicating that performance targets or cost cutting were the direct motive; the omitted test took about 10 minutes. ¹

analysisNidec Mobility, whose 125 cases were spread across several overseas sites, is described in the report as the successor of OMRON Automotive Electronics, which joined the NIDEC group in 2019. It runs a Tier 1 business supplying carmakers directly from 13 sites in Japan and abroad, with about 88% of its sales overseas, and on 1 April 2025 it absorbed the former Nidec Elesys and took over its business. ¹

analysisAt one overseas Nidec Mobility site, the committee found, recycled resin was blended at a rate of 15% into a resin part of an automotive interior component for a carmaker from around August 2020 to around September 2025 without the customer's approval, although the customer agreement prohibited recycled resin for that part. After discovering this in September 2025 the plant stopped using recycled resin but did not report it to the customer until May 2026. According to the report, the plant judged the quality risk to be low because several product verification tests had found no problem and no warranty issue had been reported for the product in the previous six years. The committee could not identify the persons who carried out and approved the change, found no material showing that the plant manager had recognised or approved it, and confirmed the use of recycled resin in only one part number. ¹

analysisThe committee found that at Nidec Techno Motor, after production of a motor was moved to another site in early 2026, the responsible quality-assurance manager sent the customer a process-change notice in May 2026 stating that the product complied with the customer's procurement policy and that chemical-substance checks were complete, although the required chemical-substance information had not been obtained; products were made and shipped until this was reported to the customer in mid-June 2026. The committee did not confirm that the products actually contained substances prohibited by the customer. It also reported that at an NTMC manufacturing site internal pass/fail criteria were relaxed under the quality-assurance department head's instruction and in-specification values were entered on inspection reports to customers, and that at a domestic development centre measured no-load test values outside customer tolerances had been rewritten as in-tolerance values since around 2010. The report does not name the individuals. According to the report, from July 2026 each NTMC site's quality head reports directly to NTMC's quality head as well as to the site head. ¹

analysisThe committee found that at a plant of a company in the Small Precision Motor Solutions unit (SPMS) making pressed products for IT equipment for an overseas customer, shipment-inspection data submitted to the customer was rewritten to values within the agreed specification from around July 2018 until around May 2026. From June 2020 an internal rule, 'SPC management rule (supplement): special handling in customer reports', allowed such 'data correction' where no quality concern arose and a plant quality manager or more senior person approved it. The rule was approved by the then head of a NIDEC development centre who also oversaw SPMS development and quality assurance; according to the committee, this person and the company's then president recognised the falsification at meetings in March 2020 at the latest, but the customer was not informed. During product development the company had asked the customer to relax the specification, already set with an earlier supplier that met it, and the customer did not approve. Pre-shipment performance tests had shown no abnormalities. The report does not name the company, plant, customer or individuals, and the committee could not establish who reported the matter to NIDEC at the March 2020 meetings. ¹

analysisAt an overseas manufacturing site of the existing automotive unit (AMEC Organic) making automotive motors used in chassis and their components for several automotive parts makers, the committee found that non-conforming products or components were reworked, with parts replaced, reprocessed, reassembled or re-inspected, and returned to production without the customers' prior approval, in part from around 2012 at the latest. All such rework had stopped by 19 February 2026. From the surviving records the committee could not identify who decided on or approved the practice, or the most senior manager aware of it before it came to light, and no market defects caused by the practice had been confirmed so far. ¹

analysisIn its notice of 4 September 2026, NIDEC said it was explaining the matter in turn to the customers concerned and discussing responses with each of them individually, and that it would carry out appropriate personnel measures based on the facts established by the committee. The announced measures included revising its global quality-assurance rules to make clear that quality-assurance heads of business units and group companies have authority to stop shipments, quality audits by its global quality function to check compliance with these rules, and a review of reporting lines with those heads. NIDEC's annual securities report for the year ended 31 March 2026 states that in September 2026 the rules were revised so that these heads may decide to stop shipments independently of manufacturing, sales and other departments, that senior management, business-unit heads and group-company presidents received quality-compliance training led by outside lawyers, and that audits by the global quality function would start in October 2026. ^{1 2}

analysisNIDEC stated on 4 September 2026 that its assessment of the financial impact of individual cases had so far identified no events materially affecting its past consolidated or non-consolidated financial statements. According to its annual securities report for the year ended 31 March 2026, inspection and remediation costs for quality misconduct known by the year-end that met the recognition criteria were reasonably estimated and recorded as a product warranty provision, with a limited impact on the consolidated financial statements; the report's passages on the provision do not state its amount. Customer compensation, damages and further costs may arise depending on continuing customer negotiations; NIDEC discloses these as a contingent liability, not reflected in the consolidated statements. The parent-company financial statements in the same report state that the internal investigations into quality misconduct and into trade and tariff matters had no impact on the parent company's (non-consolidated) financial statements. ^{1 2}

analysisNIDEC's auditor summarised both the quality and the trade investigations. PwC Japan's audit report on the consolidated financial statements for the year ended 31 March 2026, reproduced in NIDEC's notice of 30 September 2026, states in its basis for disclaimer of opinion that the company had completed an investigation into potential quality issues, which identified falsification of testing and inspection records and unauthorised use of non-conforming materials at multiple production bases, and an investigation into trade transactions and tariffs, which identified underpaid tariffs on imports of US$94.1 million (about ¥14,160 million) including interest. Related costs, liabilities and disclosures are reflected in the consolidated financial statements. PwC is here summarising the results of NIDEC's own investigations; the passage does not itself state that these matters were grounds for the disclaimer of opinion. ³

analysisAccording to NIDEC's annual securities report for the year ended 31 March 2026, an external-expert investigation found it likely that Nidec FIR International S.r.l., an Italian consolidated subsidiary, had made errors in US import declarations on tariff classification, country of origin, preferential treatment under trade agreements and import prices. NIDEC paid additional duties of US$6.8 million (about ¥991 million) including interest for 1 April 2021 to 30 September 2025, and on 2 December 2025 the US customs authority notified it that its review of the voluntary disclosure had ended. Based on the Third-Party Committee's findings and other internal investigations, NIDEC clarified responsibility relating to FIR: four principal responsible persons have left through dismissal or resignation, and other persons concerned are to receive written reprimands or strict oral measures. The report does not name them. ¹

analysisAccording to the Third-Party Committee's report, the improvement plan NIDEC submitted to the Tokyo Stock Exchange on 28 January 2026 includes remedial measures for the violation of country-of-origin labelling for customs purposes found at Nidec FIR International, part of the ACIM unit of the Appliance Automotive Division. NIDEC's annual report lists FIR-related measures including the appointment on 1 December 2025 of a customs specialist with World Customs Organization experience as head of its trade compliance office, a global trade strategy team, and central management of all US trade procedures by the legal department of Nidec Holding America, which was also given authority over US trade compliance. The same report evaluates the material weakness in internal control identified in the previous year over the unrecorded duties arising from a subsidiary's country-of-origin errors as not remediated because new material weaknesses were identified during the year, although recurrence-prevention measures were being implemented. ^{2 1}

analysisA second Italian company with the FIR name appears in earlier NIDEC records. A NIDEC press release of 2 September 2015 states that NIDEC acquired the business of the Italian company E.M.G. Elettromeccanica S.r.l. on 1 September 2015 through its subsidiary Nidec FIR Elettromeccanica S.r.l., which had joined the group with the acquisition of Nidec Kinetek Corporation and its subsidiaries in November 2012. The release does not mention Nidec FIR International S.r.l., and the documents reviewed do not set out how the two FIR companies are related. ³

analysisThe annual report also describes a statistical sampling review of US imports, begun after errors in country-of-origin marking were found in group exports to the US, which found errors in tariff classification, country of origin, preferences and import prices. Additional duties including interest on imports for which Nidec Motor Corporation and Nidec Global Appliance North America were importer of record were calculated at US$70.7 million (about ¥10,667 million) and voluntarily disclosed in August 2026; the US customs review was not yet complete. For five other US import sites the impact was estimated at US$16.6 million (about ¥2,502 million), sampling at 21 further sites was continuing, and NIDEC plans voluntary disclosures for these 26 sites; all amounts are reflected in the consolidated financial statements. They are NIDEC's calculations and estimates based on external experts' work, pending review by the US authorities. NIDEC also states that its review of other intra-group transactions found no matter with a material financial impact. ¹

analysisThe quality committee also found six cases of improper country-of-origin labelling and related customs conduct, including origin determinations not reviewed after manufacturing processes or locations changed, so that origins of questionable accuracy appeared on product labels, customs documents or certificates of origin, and improperly set customs declared values. Two cases had already been investigated by an external law firm (origin labelling at SPMS; customs declared values at the automotive unit AMEC and the former Nidec Elesys); the committee only verified those results and found nothing in that verification casting doubt on their appropriateness. It investigated three itself: origin labelling at a domestic plant and at a South-East Asian manufacturing site of Nidec Drive Technology, and improper submission of certificates of origin at the former Nidec Elesys. One more emerged from its surveys. NIDEC's annual report states that improper handling of customs declarations was confirmed at some group subsidiaries, that NIDEC investigated with outside experts, made voluntary disclosures to the authorities and paid additional duties for some US imports, and that it is carrying out corrective measures at each import and export site. ^{1 2}

analysisThe annual report also describes an additional external-expert investigation into a suspected case in which Nidec Elesys Corporation, a consolidated subsidiary that is now the inverter division of NIDEC's automotive business unit, had, without good reason, declared prices below the proper amount in customs declarations for free-of-charge transactions in used goods exported to China in past years. The investigation was completed and the impact on the consolidated financial statements is described as limited; the report describes the conduct as suspected and gives no amount. The documents do not state whether this is the same matter as the declared-value case at AMEC and the former Nidec Elesys that the quality committee lists among its six cases. ²

analysisTwo further external-expert investigations described in the annual report, both completed, concern subsidiaries that the report does not name. One examined export transactions carried out by a Swiss consolidated subsidiary without the required registration, with no impact on the consolidated financial statements. The other, which followed a whistleblower report at a Chinese consolidated subsidiary, confirmed intentional under-reporting of withholding income tax by an employee (a manager) and provisions without a clear basis, with a limited impact on the consolidated financial statements. ²

analysisAccording to a Taiwanese press report of 5 October 2023, Nidec Chaun-Choung Technology announced that Taiwanese prosecution and investigation authorities had searched the company that day, saying that it would cooperate fully and that the search had no material impact on its finances or business. The report described the announcement as very brief, said it was posted after office hours and that the company's spokespeople could not be reached afterwards, and noted that NIDEC, which acquired the company in 2018, had raised its stake from nearly 48% to more than 86%. The report does not state the subject of the investigation, and no later outcome was found in the documents reviewed. A search is an investigative step, not a finding of wrongdoing, and the documents do not connect it to NIDEC's accounting or quality matters. ¹

analysisAccording to a Taiwanese press report of 4 August 2026, Nidec Chaun-Choung Technology announced that a digital forensic investigation by an outside firm into a ransomware attack it had suffered in June found no clear technical evidence that data had been exfiltrated, although a third party claiming the attack had posted screenshots of some folder and file-name lists on the dark web. The company said a leak could not be completely ruled out, that it would keep monitoring the situation and that it would make any announcement required by law. NIDEC's annual securities report for the year ended 31 March 2026 states that ransomware damage at a Taiwanese subsidiary was among the material incidents the responsible officer reported to the board in executive reports in the period to the end of September 2026, and a risk matter reported at the board meeting of 8 July 2026. Because that report neither names the subsidiary nor describes the effects, the documents do not establish that both refer to the same incident. ^{2 3}